Peters v. Smolian

• Decision Date: 25 June 2015
• Docket Number: 23606-14
• Citation: 2015 N.Y. Slip Op. 25215,12 N.Y.S.3d 824,49 Misc.3d 408
• Parties: Alexander PETERS and Sasfox Associates, LLC a/k/a Sasfox Associates, Plaintiffs, v. Jonathan SMOLIAN, Richard J. Smolian, Randy Smolian and Darielle Smolian, Defendants.
• Court: New York Supreme Court

49 Misc.3d 408

12 N.Y.S.3d 824

2015 N.Y. Slip Op. 25215

Alexander PETERS and Sasfox Associates, LLC a/k/a Sasfox Associates, Plaintiffs

v.Jonathan SMOLIAN, Richard J. Smolian, Randy Smolian and Darielle Smolian, Defendants.

23606-14

Supreme Court, Suffolk County, New York.

June 25, 2015.

Esseks, Hefter & Angel et al., Riverhead, for Plaintiffs.

Harvey Arnoff, Esq., Riverhead, for Defendants Jonathan, Randy & Darielle Smolian.

Anthony B. Tohill, P.C., Riverhead, for Def. Richard Smolian.

Opinion

THOMAS F. WHELAN, J.

Upon the following papers numbered 1 to 18 read on this motion for summary judgment; Notice of Motion/Order to Show Cause and supporting papers 1–4; Notice of Cross Motion and supporting papers; Answering papers 5–6; 7–8; 9–10; Reply papers; Other 11–12 (supplemental affirmation); 13–14 (plaintiff's memorandum); 15–16 (plaintiff's reply memorandum); 17 (correspondence 4/28/15); 18 (correspondence 4/29/15);(and after hearing counsel in support and opposed to the motion) it is,ORDERED that those portions of this motion (# 001) by plaintiffs for summary judgment on their First cause of action for declaratory relief is denied with respect to defendantRichard J. Smolian, as he defaulted in answering which precludes an award of summary judgment due to the failure to join issue and it is denied with respect to the other defendants, to whom, the Court awards reverse summary judgment and hereby declares that the “stranger to the deed” rule is not applicable and thus does not invalidate nor render unenforceable the preemptive right of first refusal in favor of answering defendants, Randy Smolian, Jonathan Smolian and Darielle Smolian, that is contained in certain deeds and that the plaintiffs are not free to convey the subject property without regard to said right of first refusal; and it is further

ORDERED that those portions of this motion wherein the plaintiffs seeks summary judgment on their Second cause of action for a declaration that the defendants possessed of the right of first refusal must match all of the terms of the contract for the sale of the subject property is denied due to the plaintiffs' failure to establish compliance with the terms of the right of first refusal and such cause of action is dismissed due to a lack of a justiciable controversy.

This case involves conflicting claims concerning a right of first refusal set forth in various deeds.Despite the fact that the plaintiffs agreed to the restriction in two deeds that granted a right of first refusal to each of the defendants, and thereafter expressly reaffirmed that right by placing same in a quit claim deed when transferring the property to a limited liability corporation, and after participating in a celebrity-studded publicity campaign to induce the defendants into waiving that right of first refusal, plaintiff now asserts that the right of first refusal held by the three answering defendants is contrary to the “stranger to the deed” rule and should be declared void and unenforceable.That single assertion, which is before the Court, is apparently one of first impression.

Upon review of this record, the Court finds that the “stranger to the deed” rule is not applicable to this right of first refusal and declines to extend the rule to such situations.

Statement of Facts

Plaintiff, Alexander Peters(Peters), is a co-owner of the subject properties located at 42 La Foret Lane and 46 La Foret Lane in Amagansett, East Hampton.The properties are vacant and comprise 3.5 acres.Peters also owns an adjacent property, which is his primary residence.Peters claims to be the managing member of the other co-owning plaintiff.The complaint alleges that on May 11, 2012, Sasfox Associates, a New York partnership, filed with the Secretary of State a certificate of conversion to Sasfox Associates LLC, which is now the successor entity.

On October 14, 1992, Sasfox Associates became the owner of the property at 42 La Foret Lane, by deed from defendant, Richard J. Smolian, and two other non-parties.That bargain and sale deed conveyed the parcel “subject to” a right of first refusal to repurchase the land in favor of each of the individual defendants, also identified as the “Smolian Family.”

Thereafter, by bargain and sale deed dated June 24, 1997, Peters and Sasfox Associates, as tenants in common, became the owners of the property at 46 La Foret Lane, by deed from defendant, Richard J. Smolian and one other non-party.That bargain and sale deed similarly conveyed the parcel “ subject to” a right of first refusal to repurchase the land in favor of each of the individual defendants, identified as the “Smolian Family.”

Subsequently, Sasfox Associates, as executed by Peters, conveyed the parcel at 42 La Foret Lane to co-plaintiff, Sasfox Associates LLC, by quitclaim deed dated May 23, 2012.That deed also conveyed the parcel “subject to” the same right of first refusal to repurchase the land to each of the individual defendants.No similar quitclaim deed was executed by Sasfox Associates with regard to the parcel at 46 La Foret Lane to co-plaintiff, Sasfox Associates LLC.

On May 22, 2014, Peters entered into a fully executed contract of sale with non-party, Town of East Hampton(Town), to sell the subject properties, together with an additional parcel, located at 82 Stony Hill Road, for the purchase price of $3,600,000, payable at closing.The only permitted exceptions set forth in the contract, aside from real estate taxes, were set forth in paragraph 9 thereof, namely, “[z]oning and subdivision laws and regulations, and landmark, historic or wetlands designation, provided that they are not violated by the existing buildings and improvements erected on the property or their use.”

Peters represented, at paragraph 11, that he“is the sole owner of the Premises and has full right, power and authority to sell, convey and transfer the same in accordance with the terms of this contract.”The closing date was set for 60 days from the seller's receipt of a fully executed contract of sale and, pursuant to paragraph 16, subject to and conditioned upon, as a condition precedent, “[t]he accuracy, as of the date of Closing, of the representations and warranties of seller made in this contract.”

A rider to the contract conveyed the parcels, at paragraph 31, subject to:

(b) Covenants, easements, and restrictions of record, if any, provided same do not render title to the Premises unmarketable or prohibit the use or dedication of the Premises as open space and parkland for use by the general public.

(c) A public hearing and authorizing resolution of the Town Board of the Town of East Hampton authorizing the Town's purchase of the subject premises.

The Town Board of the Town of East Hampton authorized the Town's purchase of the subject premises, and the additional parcel, on June 6, 2014.No history has been offered as to the right of first refusal issue during the ensuing months.

However, four months after entering into the above-described contract of sale, Peters and the Town executed a second, and rather self-serving Rider to the contract, on September 18, 2014 and September 23, 2014, respectively, that set forth the following:

40.Both Seller and Town acknowledge that the Town is purchasing the subject premises with the express understanding that the subject premises shall remain as open space, as authorized by Town Board Resolutions 2014–743 and 2014–744, attached hereto as Exhibit “A.”This acquisition and the future management and stewardship of the subject premises shall be governed by Town Law § 64(e).

Thereafter, on October 1, 2014, defendantRichard J. Smolian, signed a waiver of only his right of first refusal as recited in the deeds described above.The waiver document was intended to be signed by each of the defendants, that is, the “Smolian Family.”The waiver was made in consideration of a payment by Peters of $50,000, at time of the closing with the Town, but “only in the event that each member of the Smolian Family signs this Waiver.”

Apparently, Peters initiated negotiations with the answering defendants with the goal of buying out their preemptive rights.These discussions proved unavailing.Thereafter, in November and December of 2014, a newspaper campaign was commenced to urge the Smolian Family to relinquish their right of first refusal.This action was commenced by the filing of a summons and complaint on December 4, 2014.¹Therein, the plaintiffs seek a judicial declaration that defendantRichard J. Smolian waived any right of first refusal under the subject deed; that the right of first refusal set forth in the deeds in favor of the answering defendants be declared invalid and unenforceable under the “stranger to the deed” rule; and that the plaintiff be declared free to convey the premises free and clear of any claimed right of first refusal.In a separate Second cause of action, the plaintiff seeks, in the alternative, a declaration that any defendants found to be possessed of an enforceable right of first refusal must match all of the terms of the contact of sale entered into by the plaintiffs and the Town of East Hampton.Unlike his co-defendants, defendantRichard J. Smolian, failed to appear herein by answer.

The record before the Court demonstrates that Peters never extended the defendants the opportunity to exercise their right of first refusal before or at any time after he entered into the May 22, 2014 contract of sale with the Town.Peters only offered the defendants the single option of waiving their right of first refusal, which only the defendant, Richard J. Smolian exercised.

It is important in such cases to examine the language creating the right of first refusal.

Subject to Declaration of Covenants and Restrictions in Liber 8665 cp 113.

Subject to the right of Richard J. Smolian, Randy Smolian, Darielle Smolian, Jonathan Smolian or either of them (the “Smolian Family”) to exercise a right of first refusal, as hereinafter defined, to repurchase the...