Beach 104 St. Realty Inc. v. Kisslev-Mazel Realty LLC, 2009 NY Slip Op 32421 (N.Y. Sup. Ct. 10/8/2009), 25569/07
| Decision Date | 08 October 2009 |
| Docket Number | Motion Seq. No: 3,Motion Cal. No: 4,Motion Seq. No: 2,No. 25569/07,Motion Cal. No: 5,25569/07 |
| Parties | BEACH 104 ST. REALTY INC., Plaintiff, v. KISSLEV-MAZEL REALTY LLC., et al., Defendants. |
| Court | New York Supreme Court |
Upon the foregoing papers, it hereby is ordered that the motion and cross-motion are determined as follows:
This is an action based upon fraud arising out of a real estate transaction between plaintiff Beach 104 St. Realty Inc. ("plaintiff") and defendants Meyer Chaim Greenbaum, Leah Greenbaum, Eliezer Greenbaum and Mendel Greenbaum ("individual defendants"), principals of defendant Kisslev Mazel Realty LLC. ("Kisslev"). By order of this Court dated July 3, 2008, defendants' motion to dismiss the complaint was denied. Plaintiff now moves for partial summary judgment on the first and second causes of action asserted in the complaint, and defendants now cross move for an order either granting them summary judgment; leave to reargue the July 3, 2008 decision of this Court and, upon reconsideration an order dismissing the complaint; or vacating the Note of Issue; and the imposition of sanctions against plaintiff.
In March 2004, plaintiff was introduced to defendants in connection with the purchase by plaintiff from defendant Kisslev of two parcels of real property located in Queens County, New York. The parcels are identified as Block 1610, Lots 10 and 20. The contract of sale required plaintiff to pay a purchase price of $3,412,500.00 for Block 1610, Lot 10 and $962,500.00 for Lot 20. Kisslev possessed the capacity to convey Lot 10 to plaintiff because of its status as assignee of the successful mortgage foreclosure sale bidder for Lot 10, an affiliated company named Kislev Mazel Corp., by assignment dated April 3, 2001. A closing was held on October 14, 2005 for both Lot 10 and 20. Kisslev assigned its foreclosure sale bidder status to plaintiff by assignment dated October 14, 2005. At the closing, a mortgage foreclosure sale referee tendered a referee's deed to Lot 10 to plaintiff, dated October 14, 2005. The consideration paid by plaintiff to Kisslev in order to effectuate the closing of Lot 10 was the contract price of $3,412,500.00. Further, at the closing, Kisslev tendered a bargain and sale deed to Lot 20 to plaintiff, dated October 14, 2005. The consideration paid by plaintiff to Kisslev in order to effectuate the closing of Lot 20 was the contract price of $962,500.00. Subsequent to the closing, plaintiff expended $2,460,000.00 for construction efforts.
It was only after the October 14, 2005 closing that plaintiff discovered for the first time that the properties it purchased were slated, as early as February 2, 2004, by the City of New York for condemnation, well before plaintiff's purchase of the land, and that defendants had been in contact with the City regarding such condemnation for months prior to entering into the contracts of sale of the properties, but concealed this information from plaintiff. Plaintiff asserts that it first learned about the condemnation plans when it received a notice of petition and petition dated January 4, 2007, and when plaintiff asked defendants about such circumstances, defendants denied any discussions or knowledge of any condemnation. Plaintiff alleges that if defendants had not concealed the truth and misrepresented their knowledge of the condemnation plan, it would not have entered into the contract to purchase the properties, and would not have gone into substantial debt toward its planned utilization of the property to create either two or three family homes or condominiums for sale.
The condemnation proceeding instituted by the City of New York by its filing of a Notice of Petition and Petition in the Supreme Court of the State of New York, Queens County, resulted in an order dated February 16, 2007 (Rios, J.), and entered March 23, 2007, that vested title to the property at issue in the City of New York. Plaintiff thereafter appeared and filed a Notice of Claim, dated April 2, 2007, to recover from the City of New York the lost value of its properties; the instant action was commenced in October 2007. Plaintiff, in its April 2, 2007 Notice of Claim served in the condemnation proceeding, alleged the following damages for which it sought compensation:
(1) Direct damages for the taking of the property (land and improvements), including, but not limited to all economic benefits and monies that would have been realized by the land, improvements and the real estate project.
(2) Damages equivalent to the full economic value of this real estate project, which project was near completion.
Plaintiff thereafter settled its case with the City of New York and by Final Decree dated December 9, 2008 (Rios, J.), plaintiff was awarded $10,900,000.00 in compensation for the taking of its property by eminent domain by the City of New York.2
In its action commenced against defendants, plaintiff seeks compensatory and punitive damages based upon fraud (first cause of action), breach of Covenant of Good Faith and Fair Dealing (second cause of action), fraudulently induced unilateral mistake (third cause of action), unjust enrichment (fourth cause of action), and public fraud (fifth cause of action). Plaintiff seeks partial summary judgment on its first and second claims sounding in fraud and breach of Covenant of Good Faith and Fair Dealing, respectively; defendant cross moves for, inter alia, dismissal of the complaint.
Plaintiff moves for summary judgment on its fraud and breach of Covenant of Good Faith and Fair Dealings causes of action and frames the issue as being "whether having been aware that the properties were slated for condemnation, did defendants have a duty to disclose same to a buyer unaware (or likely unaware) of said fact in the course of the sale of the properties?" It argues that
the Court, in making that determination must consider whether the fact of condemnation would have impacted upon plaintiff's decision to enter into the transaction and whether defendants had superior knowledge concerning the condemnation which was not available to both parties. In opposition, defendants argue that the issues sought to be raised in this action have been subsumed by the $10,900,000.00 settlement reached in the condemnation proceeding between plaintiff and the City of New York that resulted in a settlement amount far in excess of the $7,500,000.00 land costs and construction costs.
It is well-established that summary judgment should be granted when there is no doubt as to the absence of triable issues. See, Rotuba Extruders, Inc. v. Ceppos, 46 N.Y.2d 223, 231(1978); Andre v. Pomeroy, 35 N.Y.2d 361, 364 (1974); Taft v. New York City Tr. Auth., 193 A.D.2d 503, 505 (1993). As such, the function of the court on the instant motion is issue finding and not issue determination. See, D.B.D. Nominee, Inc., v. 814 10th Ave. Corp., 109 A.D.2d 668, 669 (1985). The proponent of a summary judgment motion must tender evidentiary proof in admissible form eliminating any material issues of fact from the case. See, Zuckerman v. City of New York, 49 N.Y.2d 557, 562 (1980). If the proponent succeeds, the burden shifts to the party opposing the motion, who then must show the existence of material issues of fact by producing evidentiary proof in admissible form, in support of his position. See, Zuckerman v. City of New York, supra.
Here, plaintiff alleges that defendants fraudulently concealed the pending condemnation of the property that it was purchasing. "'To recover damages for fraud, a plaintiff must prove (1) a misrepresentation or an omission of material fact which was false and known to be false by the defendant, (2) the misrepresentation was made for the purpose of inducing the plaintiff to rely upon it, (3) justifiable reliance of the plaintiff on the misrepresentation or material omission, and (4) injury' (Jablonski v. Rapalje, 14 A.D.3d 484, 487, 788 N.Y.S.2d 158)." Ozelkan v. Tyree Bros. Environmental Services, Inc., 29 A.D.3d 877, 878 (2nd Dept. 2006). Where, as here, a fraud claim is based on an omission or concealment of material fact, plaintiff must establish additionally that defendant had a duty to disclose material information and failed to do so. See, Barrett v. Freifeld, 64 A.D.3d 736 (2nd Dept. 2009); Sitar v. Sitar, 61 A.D.3d 739 (2nd Dept. 2009); Ozelkan v. Tyree Bros. Environmental Services, Inc., 29 A.D.3d 877, 878 (2nd Dept. 2006); E.B. v. Liberation Publications, Inc., 7 A.D.3d 566 (2nd Dept. 2004).
"'New York adheres to the doctrine of caveat emptor and imposes no duty on the seller or the seller's agent to disclose any information concerning the premises when the parties deal at arm's length, unless there is some conduct on the part of the seller or the seller's agent which constitutes active concealment' (citations omitted)." Matos v. Crimmins, 40 A.D.3d 1053 (2nd Dept. 2007), citing, Jablonski v. Rapalje, 14 A.D.3d 484, 485 (2nd Dept. 2005). See, also, Daly v. Kochanowicz, __ A.D.3d_, __ N.Y.S.2d_, 2009 WL 2516932 (2nd Dept. 2009). Although the "mere silence of the seller, without some act or conduct which deceived the purchaser, does not amount to a concealment that is actionable as a fraud" [id., 40 A.D.3d at 1054], "[c]oncealment, with intent to
defraud, of facts which one is duty-bound to disclose is of the same legal effect and significance as affirmative misrepresentations of fact (citations omitted)." Emord v. Emord, 193 A.D.2d 775 (2nd Dept.1993). "'To maintain a cause of action to recover damages for active concealment, the plaintiff must show, in effect, that the seller or the seller's agents thwarted the plaintiff's efforts to fulfill his [or her] responsibilities fixed by the doctrine of caveat emptor' [(Jablonski v. Rapalje,...
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