Case Law Shorts

Case Law Shorts  6/25/13     New York Appellate Divison, Second Dept.
Bouandary Line Dispute/Curb, Hedge and Fence/"Doctrine of Practical Location": Plaintiff and defendant share a common boundary line. Defendant's driveway curb encroaches onto Plainiff's property along with a hedge and a fence. Plaintiff moved for summary judgment to establish the boundary as set forth in the deeds and for an injunction. Defendant opposed arguing that the "Doctrine of Practical Location" established the boundary line along the line of encroachments. The Supreme Court, Westchester County, denied vs. plaintiff and the Second Dept. sustained... "Pursuant to the doctrine of practical location, '[a] practical location of a boundary line and an acquiescence therein for more than the statutory period is conclusive of the location of such boundary . . . although such line may not in fact be the true line according to the calls of the deeds of the adjoining owners' (McMahon v Thornton, 69 AD3d 1157, 1160 [internal quotation marks omitted]; see Katz v Kaiser, 154 NY 294, 298; Baldwin v Brown, 16 NY 359, 362-364; Kaneb v Lamay, 58 AD3d 1097, 1098). '[A]pplication of the doctrine requires a clear demarcation of a boundary line and proof that there is mutual acquiescence to the boundary by the parties such that [*2]it is definitely and equally known, understood and settled'' (McMahon v Thornton, 69 AD3d at 1160, quoting Robert v Shaul, 62 AD3d 1127, 1128; see Tesone v Hoffman, 84 AD3d 1219, 1220)." The Court stated that there is a question of fact as to whether plaintiff's predecessor acquiesced to the use for a period of more than 10 years. Jakubowicz v Solomon, Appellate Division, Second Department, 2013 NY Slip Op 04578,June 19, 2013

Case Law Shorts   6/25/13      New York Appellate Division, Second Dept.
Action to Set Aside Deed Executed by Managing Member: LLC had three members. Managing Member executed a deed to another LLC that managing member also managed. The two other members, representing a majority interest in LLC, voted to replace managing member and thereafter, executed a deed for the same premises to purchaser. Purchaser discovered managing member's deed to other LLC and brought suit for specific performance. The two other members joined plaintiff's request for specific performance and to set aside the deed to other LLC. Other members maintained that managing member did not have authority to effecutate the conveyance. The Supreme Court, Kings County, denied plaintiff's motion for summary judgment and the Second Dept. sustained citing the language in the operating agreement... "The Limited Liability Company Law states that '[e]xcept as provided in the operating agreement,' a vote of at least the majority in interest of the members entitled to vote is required to approve a transfer of substantially all of the assets of a limited liability company (Limited Liability Company Law § 402[d][2]; see Manitaras v Beusman, 56 AD3d 735, 736). Here, article 11 of the operating agreement for Brothers LLC expressly authorized the managing member to 'make decisions relating to: the . . . sale . . . or other disposition of the Property.' Accordingly, contrary to the Ward defendants' contention, they failed to make a prima facie showing that the transfer of the property by Lewis, as the managing member, was unauthorized under the operating agreement or Limited Liability Company Law § 402(d)(2)." Ahmed v Fulton St. Bros. Realty, LLC, Appellate Division, Second Department,2013 NY Slip Op 04564, June 19, 2013.

Case Law Shorts  6/18/13     New York Court of Appeals
Mortgage Foreclosure/Priority/Mechanic's Liens/Failure to File Building Loan Agreement/Acquision Costs Not Subordinated to Mechanic's Liens: Lender agreed to provide funding to developer in two tranches, one for acquisition and one for deposit into a restricted account to pay for improvements. The lending was purportedly fashioned to accomodate non-building loan nomenclature and the lender did not file a building loan agreement. Invariably, lender declared default inasmuch as mechanic's liens were mounting and owner failed to pay property taxes. Mechanic's lienors disputed priority as the building loan agreement had not been filed and the Supreme Court, finding that the financing constituted a building loan and further rejecting lender's argument that the acquistion funds were not subordinated, applied Section 22 of the Lien Law and ordered a sale with the liens to be paid first. The Appellate Division sustained and the Court of Appeals, following one of two diverging rulings, ruled that the funds used to acquire the property were protected from the mechanic's liens... "This result is consistent with the language of Lien Law §§ 22 and 2 (3), (13) and (14), and does not contravene the statute's purpose, to give contractors and material suppliers notice of how much money a building loan makes available for construction. Section 22 does not state that the entire interest of each party to an unfiled building loan contract is subject to a later-filed notice of lien, and we do not infer such a limitation from the phrase 'either with or without the sale of land,' as did the Atlantic Bank court. As the Yankee Bank court pointed out, the subordination penalty logically applies only to funds loaned to pay for improvements." Altshuler Shaham Provident Funds, Ltd. v GML Tower, LLC, Court of Appeals, 2013 NY Slip Op 04273, June 11, 2013
opinion                    -Johnny D. Hall, Esq.

Case Law Shorts  6/18/13     New York Court of Appeals
Tax Assessment/Lead Based Paint Contamination/Market Value: Petitioner sought review of city's valuation of rental houses. In support thereof, petitioner produced expert testmony and cited a favorable holding involving a lead based paint Superfund site. The Supreme Court denied the petition after finding petitioner's rental income evidence unpursuasive. The Appelltate Division confirmed and the Court of Appeals sustained.."Here, notwithstanding the alleged presence of lead paint during the tax years 2001-2004, the five properties continued to generate rental income for petitioner, and he did not otherwise demonstrate that the presence of lead-based contaminants depressed the market value of the five properties." Matter of Roth v City of Syracuse, Court of Appeals, 2013 NY Slip Op 04271, June 11, 2013
opinion                    -Johnny D. Hall, Esq.

Case Law Shorts   6/4/13      New York Appellate Division, Second Dept.
Title Insurance/Post-Policy Event vs. Post-Closing Boundary Line Agreement and Pre-Closing Settlement Agreement: Purchaser bought property in 2002 and bought a title insurance policy. Thereafter, in 2003, a boundary line agreement affecting the insured parcel, and several other parcels, was recorded which conveyed portions of the affected parcels to the county in exchange for the county’s undertaking beach maintenance for the affected parcels. The boundary line agreement was the culmination of litigation that began in 1984 and ended with a settlement agreement in 1994. Purchaser sued title insurer for breach of contract. Insurer moved for summary judgment based upon a policy exclusion, 3(d) – defects attaching or created after the date of policy. The Supreme Court, Suffolk County, granted for title insurer but the Second Dept. reversed stating that the defect attached, not when the boundary line agreement was recorded in 2003, but when it was created in 1996. Nastasi v County of Suffolk, Appellate Division, Second Department, 2013 NY Slip Op 03824, May 29, 2013

Case Law Shorts   6/4/13     New York Appellate Division, First Dept. 
Action to Set Aside Transfer of Real Property/Step Daughter vs. Wife/Undue Influence vs. Competence/Estate Planning: Decedent executed estate planning documents that transferred real and personal property to his wife. Decedent’s daughter from a prior marriage, sued to set aside the transfers maintaining that the wife was abusive and “wore” the decendent down until he signed the documents without reading them. Defendant moved for summary judgment and the Surrogate’s Court, New York County denied. Defendant appealed arguing that plaintiff relied upon hearsay evidence and further supported its motion by pointing out that plaintiff affirmed decedent’s competence. However, the First Dept. sustained stating that hearsay evidence, for summary judgment opposition, may be considered where “it is not the only proof submitted”. Further, the Court stated that plaintiff’s case sought to prove undue influence that defendant overcome decedent’s free will…“However, plaintiffs do not claim that the decedent was incompetent; the allegations are that the decedent suffered a ‘cognitive impairment,’ that defendant committed forgery, and deceived or abused and importuned the decedent, wearing him down to the point that he signed without reading the documents. Thus, viewed in the light most favorable to plaintiffs (see e.g. Martin v Briggs, 235 AD2d 192, 196 [1st Dept 1997]), that the decedent, after the fact, asserted that he would not have signed the documents had he known what was in them does not defeat the claim of undue influence.”  Bishop v Maurer, Appellate Division, First Department, 2013 NY Slip Op 03771, May 28, 2013

Case Law Shorts  6/4/13     New York Appellate Division, First Dept.
Mortgage Foreclosure/Mechanic’s Lien/Bank’s Breach of Contract to Fund Building Loan/Estoppel Certificates: Bank foreclosed a mortgage and mortgagor counterclaimed for fraud and breach of contract arguing that bank orally agreed to extend a due date and failed to make continuing disbursements for construction.  The Supreme Court, New York County, dismissed the counterclaims and the First Dept. sustained. As to the fraud claim, the Court stated that mortgagor could not have reasonably relied upon any oral agreement inasmuch as the loan documents require all modifications to be in writing.  As to breach of contract for failing to fund the project, the Court pointed to an estoppel signed by mortgagee disclaiming any claims or defenses. Mortgagee also maintained that bank breached by failing to provide funds to discharge a mechanic’s lien – a purported bank representation for advance of funds contained in an estoppel certificate. However, the Court refused to construe the language to create any affirmative obligation by the bank.  Orchard Hotel, LLC v D.A.B. Group, LLC, Appellate Division, First Department, 2013 NY Slip Op 03778, May 28, 2013