Mackey v. My Little Saltbox, LLC

• Decision Date: 23 August 2022
• Docket Number: Index No. EC2021-33009
• Citation: 2022 NY Slip Op 50814
• Parties: William Mackey, Plaintiff, v. My Little Saltbox, LLC, DARCY NUTTER, DAVID NUTTER, SPIRE INSPECTIONS, LLC, and LAWRENCE MCGANN, Defendants.
• Court: Washington Supreme Court

2022 NY Slip Op 50814(U)

William Mackey, Plaintiff, v. My Little Saltbox, LLC, DARCY NUTTER, DAVID NUTTER, SPIRE INSPECTIONS, LLC, and LAWRENCE MCGANN, Defendants.

Index No. EC2021-33009

Supreme Court, Washington County

August 23, 2022

Unpublished Opinion

Maynard, O'Connor, Smith & Catalinotto, LLP, Albany (Bridget M. Schultz of counsel), for plaintiff.

Gilchrist Tingley, P.C., Troy (Andrew W. Gilchrist of counsel), for defendants My Little Saltbox, LLC, Darcy Nutter and David Nutter.

Hall Booth Smith P.C., New York (Marc R. Wilner of counsel), for defendants Spire Inspections, LLC and Lawrence McGann.

ROBERT J. MULLER, J.S.C.

On June 7, 2019, defendant My Little Saltbox, LLC (hereinafter Saltbox) entered into a contract to sell certain real property - located at 1089 Beadle Hill Road in Valley Falls Washington County - to plaintiff for the sum of $126,805.00. On May 7, 2019, defendants Darcy Nutter and David Nutter - who own Saltbox - executed a Property Condition Disclosure Statement (hereinafter PCDS) relative to the single-family home on the property, with a copy of this PCDS given to plaintiff prior to execution of the contract. This PCDS indicated as follows:

• No "rot or water damage to the structure."

• No "termite, insect, rodent or pest infestation or damage."

• No "known material defects" with respect to the "roof/roof covering."

• No "known material defects in any of the following structural systems: footings, beams, girders lintels, columns or partitions."

• No "known material defects" to the "electric."

• No "flooding, drainage or grading problems... on any portion of the property."

• Basement has "seepage that results in standing water [a]t spring thaw."

"known material defects" to the "[p]lumbing system" or "[f]oundation/slab."

According to the complaint, plaintiff visited the property prior to execution of the contract. At that time the home "was fully furnished" and the lights/electricity in the basement [were] not working[, as the result of which he] was only able to observe the condition of the basement through a flashlight." The complaint further alleges as follows:

"On or about June 4, 2019, plaintiff hired [defendant] Spire [Inspections, LLC (hereinafter Spire)] to conduct a residential home inspection, and paid Spire a fee therefore.

"Upon information and belief, [defendant Lawrence] McGann[, the owner and principal of Spire,] conducted the inspection....

"Upon information and belief, McGann instructed plaintiff not to attend the inspection.

"Upon information and belief,... McGann told plaintiff he did not need to go back to the [p]roperty to view it before the closing.

"Upon information and belief, McGann prepared a home inspection report following the inspection.

"Upon information and belief, the home inspection report was 15 pages in total....

"Upon information and belief, McGann only provided the last page of the inspection report (i.e., page 15) to [p]laintiff."

The last page of this report included a summary of the most substantial defects found in the home, including defects in the roof ("[p]lumbing [v]ents... to be 1-3 feet above the roof eave and 10 feet from any bed room window") structure ("[w]ood [p]ost[ n]ot supporting anything" in the basement); plumbing ("[d]rain [t]ube [m]issing" in basement water heater); and electrical outlets in the downstairs bathroom and second-floor bedroom.

The closing took place on August 14, 2019 and plaintiff thereafter moved into the home with his family. According to plaintiff, when he "started moving... furniture into the [p]roperty, he began to notice cracks and floor sloping." He also "notice[d] that water was profusely leaking into the basement and in the roof." According to plaintiff, these conditions had previously been concealed by paint, the placement of furniture and the lack of lighting in the basement. In February 2021, plaintiff hired an engineer to inspect the home and he found several problems including, inter alia, that

"[m]any floor joist under the kitchen are resting on grade and have major section loss and [are] structural[ly] unsound[; t]he exterior grade on the west and north side of the structure is higher than [the] foundation and the grade is sloping toward the building causing water to rest on the exterior creating deterioration and rot[; f]loor beams and floor joist in main portion of the house has evidence of insect infestation[ and i]n many location[s] the beams and joists have become soft and powdery[; t]here is constant flow of water in the basement coming from pour [sic] drainage on the outside of the building[; and t]he support columns are showing signs of deterioration at the bases from water exposure [and t]he columns and column foundations are not up to standards."

Plaintiff thereafter obtained estimates for repairs, which will allegedly cost in excess of $100,000.00. Plaintiff commenced this action on June 21, 2021, asserting seven causes of action:

(1) that Saltbox breached the contract of sale and, further, that Saltbox fraudulently induced him to enter into the contract;

(2) that Saltbox violated the requirements of RPAPL article 14, which governs the execution of a PCDS;

(3) that Saltbox is liable for fraud and misrepresentation;

(4) that Spire breached the contract relative to inspection of the property;

(5) that Spire is liable for negligence and gross negligence;

(6) that plaintiff is entitled to pierce the corporate veil relative to Saltbox and hold the Nutters personally liable; and

(7) that plaintiff is entitled to pierce the corporate veil relative to Spire and hold McGann personally liable.

Presently before the Court is (1) Saltbox and the Nutters' pre-answer motion to dismiss plaintiff's first and third causes of action under CPLR 3211 (a) (1) and (7); and (2) Spire and McGann's motion to dismiss the complaint as against them under CPLR 3211 (a) (1), (5) and (7). ^[1] The motions will be addressed ad seriatim.

Saltbox and the Nutters' Motion to Dismiss

Saltbox and the Nutters contend that they are entitled to dismissal of the first cause of action under the doctrine of merger which provides that the "provisions in a contract for the sale of real estate merge into the deed and are thereby extinguished absent the parties' demonstrated intent that a provision shall survive transfer of title'" (Arnold v Wilkins, 61 A.D.3d 1236, 1236 [2009], quoting Hunt v Kojac, 245 A.D.2d 858, 858-859 [1997]; see Schoonmaker v Hoyt, 148 NY 425, 429-430 [1896]; Alexy v Salvador, 217 A.D.2d 877, 878 [1995]). According to Saltbox and the Nutters, the property was "sold 'as is' without warranty as to condition" under the terms of the parties' contract - with no provisions surviving transfer of title. As a result, Saltbox and the Nutters contend that plaintiff cannot succeed on a breach of contract cause of action relative to this contract.

Saltbox and the Nutters further contend that they are entitled to dismissal of the first cause of action under the doctrine of caveat emptor, which "'imposes no duty upon a vendor to disclose any information concerning the property in an arm's length real estate transaction'" (Stoian v Reed, 66 A.D.3d 1278, 1279 [2009], quoting Bethka v Jensen, 250 A.D.2d 887, 887-888 [1998]; accord Meyers v Rosen, 69 A.D.3d 1095, 1096 [2010]). In Pettis v Haag (84 A.D.3d 1553 [2011]), the Third Department further explained as follows:

"Although New York traditionally adheres to the doctrine of caveat emptor in an arm's length real property transfer, a seller may be liable for failing to disclose information if the conduct constitutes active concealment. A false representation in a disclosure statement may constitute active concealment. To prevail upon such a claim, plaintiffs must demonstrate that the false representation prevented fulfillment of their own obligations imposed by the doctrine of caveat emptor and that they justifiably relied upon the false representation. Justifiable reliance does not exist [w]here a party has the means to discover [a falsehood] by the exercise of ordinary intelligence, and fails to make use of those means" (id. at 1554-1555 [internal quotation marks and citations omitted]).

According to Saltbox and the Nutters, plaintiff cannot succeed on a fraudulent inducement cause of action relative to the contract because he had ample means to discover any falsehood in the PCDS and failed to make use of those means. In this regard, the contract expressly provided that plaintiff could complete a "structural inspection" prior to closing, and plaintiff alleges that he in fact did so.

At the outset, the Court declines to find that Saltbox and the Nutters are entitled to dismissal of the first cause of action under CPLR 3211 (a) (1). "'A motion pursuant to CPLR 3211 (a) (1) to dismiss the complaint as barred by documentary evidence may be properly granted only if the documentary evidence utterly refutes the plaintiff's factual allegations, conclusively establishing a defense as a matter of law. To qualify as documentary evidence, the evidence must be unambiguous and of undisputed authenticity'" (Koziatek v SJB Dev. Inc. 172 A.D.3d 1486, 1486 [2019], quoting Calhoun v Midrox Ins. Co., 165 A.D.3d 1450, 1450 [2018] [internal quotation marks, brackets and citations omitted]; see Doller v Prescott, 167 A.D.3d 1298, 1299 [2018]). "'Materials that clearly qualify as documentary evidence include documents reflecting out-of-court transactions such as mortgages, deeds, contracts, and any other papers, the contents of which are essentially undeniable'" (Koziatek v SJB Dev. Inc., 172 A.D.3d at 1487, quoting Ganje v Yusuf, 133 A.D.3d 954, 956-957 [2015] [citations omitted]; see Midorimatsu, Inc. v Hui Fat Co., 99 A.D.3d 680, 682 [2012], lv dismissed 22 N.Y.3d 1036 [2013]). Here,...