Opinion
3013/2005.
January 30, 2009.
The following papers numbered 1 to 13 read on this motion by defendant Washington Title Insurance Company for an order granting summary judgment dismissing the complaint in its entirety. Plaintiff Bronx LLC cross-moves for an order granting partial summary judgment on its breach of contract and negligence claims.
Numbered
Papers Notice of Motion-Affirmation-Exhibits(A-K) ...... 1-4 Notice of Cross Motion-Affirmation- Affidavit-Exhibits(A-W) ......................... 5-9 Opposing Affidavit .............................. 10-11 Reply Affirmation ............................... 12-13 Memorandum of Law ............................... Memorandum of Law ............................... Memorandum of Law ...............................Upon the foregoing papers it is ordered that the motion and cross motion are determined as follows:
The note of issue was filed in this action on February 21, 2008, and the 120-day period in which to move for summary judgment expired on June 20, 2008. As defendant served the within motion on June 9, 2008, said motion is timely. Plaintiff served its cross motion on August 27, 2008.
In Brill v City of New York, ( 2 NY3d 648, 652), the Court of Appeals held that CPLR 3212(a) permitted a late summary judgment motion upon the showing of good cause, which "requires . . . a satisfactory explanation for the untimeliness — rather than simply permitting meritorious, nonprejudicial filings, however tardy. . . . No excuse at all, or a perfunctory excuse, cannot be 'good cause'" (see also Miceli v State Farm Mut. Auto. Ins. Co., 3 NY3d 725, 726, 727). The Appellate Division, Second Department, in applying Brill to late cross motions has taken two different approaches. In Thompson v Leben Home for Adults, ( 17 AD3d 347) the court stated that "in the absence of such a 'good cause' showing, the court has no discretion to entertain even a meritorious, non-prejudicial [cross] motion for summary judgment." However, the Appellate Division, Second Department has also stated that a cross motion for summary judgment made after the expiration of the statutory 120-day period may be considered by the court, even in the absence of good cause, where a timely motion for summary judgment was made seeking relief "nearly identical" to that sought by the cross motion (see Grande v Peteroy, 39 AD3d 590; Fahrenholz v Security Mut. Ins. Co., 32 AD3d 1326; Bressingham v Jamaica Hosp. Med. Ctr., 17 AD3d 496, 497; see Altschuler v Gramatan Mqt., Inc., 27 AD3d 304). An otherwise untimely cross motion may be made and adjudicated because a court, in the course of deciding the timely motion, may search the record and grant summary judgment to any party without the necessity of a cross motion (CPLR 3212[b]). The court's search of the record, however, is limited to those causes of action or issues that are the subject of the timely motion (see Dunham v Hilco Constr. Co., Inc., 89 NY2d 425, 429-430; Filannino v Triborough Bridge Tunnel Auth., 34 AD3d 280; Baseball Off. of Commr. v Marsh McLennan, Inc., 295 AD2d 73, 82).
Here, as plaintiff failed to set forth any excuse for its late cross motion, and it does not seek relief "nearly identical" to that of the defendant, the cross motion is denied as untimely. The court, however, will consider plaintiff's cross motion as opposition papers.
Plaintiff Bronx LLC alleges in its complaint that on February 27, 2003, 1786 Lafayette Avenue Corp purchased real property known as 1786-1792 Lafayette Avenue, Bronx, New York, from the Northeastern Conference Corporation of Seventh-Day Adventists (Northeastern), for $210,000.00, pursuant to a bargain and sale deed. On February 27, 2003, 1786 Lafayette Avenue Corp transferred said real property to Bronx LLC, for the recited consideration of $10.00, pursuant to a bargain and sale deed. The subject real property consists of three lots identified as Block 3597, Lots 40, 42 and 43. Lots 42 and 43 were vacant, while Lot 40 was improved by a four story brick and concrete building with a street address of 761 Beach Avenue, Bronx, New York. This building was unfinished and vacant.
Joseph Makhani is the managing member of Bronx LLC. His brother Kamran (Michael) Makhani is the only other member of Bronx LLC. Joseph Makhani is also an officer of 1786 Lafayette Avenue Corp., and is an officer and shareholder of President Inc. and an officer and shareholder of Construction Center Inc. Bronx LLC is in the business of acquiring real property which it rehabilitates and sells, President Inc. is engaged in general residential construction, and Construction Center Inc. is also engaged in construction.
Prior to the purchase of the subject real property Intracoastal Abstract Inc. (Intercoastal), the agent of defendant Washington Title Insurance Company(Washington), conducted a title search on behalf of Mr. Makhani. The documentary evidence submitted establishes in a report effective April 6, 2001, Intracoastal listed under Schedule B, disposition, "39. Lis Pendens to be cancelled and action to be discontinued. Index No. 2027/94 Date Filed:6/24/94 Nature of Action: unsafe building (affects Lot 40)." In a letter dated May 16, 2002, Intracoastal advised Mr. Makhani that he could "now omit objections numbered 8, 9, 21, 22, 23, 24 and 39" from the report, and annex this letter to his certificate of title and consider it a part of it. In a letter dated June 26, 2002, First American Title Insurance Company of New York informed Washington that in consideration of its issuing title insurance free of the stated exception concerning said Lis Pendens, it would indemnify Washington for the question of marketability of title, and extended such coverage to any and all reissues to be issued by Washington affecting the subject premises, whether by fee insurance, mortgage insurance, or assignment of foreclosure of any mortgage.
Bronx LLC purchased title insurance on February 27, 2003, from defendant Washington in connection with the purchase of the subject real property. The title insurance policy has a face value of $210,000.00. Intracoastal's title charge sheet includes a fee of $270.00, for recording two deeds. It is undisputed that Intracoastal's fees were paid on behalf of Bronx LLC, and that Intracoastal took possession of the deeds to the subject property at the closing for the purpose of filing said deeds. The deed from Northeastern to 1786 Lafayette Avenue Corp and the deed from 1786 Lafayette Avenue Corp to Bronx LLC were not filed until May 18, 2004.
On May 12, 2003, the City of New York Department of Housing, Preservation and Development (HPD) Office of Housing Operations, Enforcement Services, Division of Maintenance/Demolition Unit, sent a letter to the prior property owner, Northeast Conference, stating that "[i]n response to the May 6, 2003 Declaration of Emergency issued by the Department of Buildings, HPD will engage a contractor to cure the emergency condition, unless it acted within three business days. This letter referred to 761 Beach Avenue, Bronx, Block 3597, Lot 42. HPD stated that the contractor's costs in rectifying the emergency would be billed to the property owner and if not paid, would result in a lien being placed on the property. It is undisputed that Bronx LLC did not receive any notice of the proposed demolition.
Plaintiff in its first cause of action for breach of contract, alleges that Washington failed to reimburse Bronx for the loss it suffered as a result of the demolition of the premises and the subsequent lien placed on the premises, and seeks to recover the full value of the policy. In its second cause of action, plaintiff alleges that Washington or its agent agreed to record the deeds to the premises and that it negligently failed to timely record the deed, causing damages in the sum of $350,000.00.
With respect to plaintiff's first cause of action for breach of contract, "[a] policy of title insurance protects a property owner 'against loss by reason of defective titles and encumbrances and insur[es] the correctness of searches for all instruments, liens or charges affecting the title to such property' (Insurance Law § 1113[a][18];see also, Insurance Law § 6401[b]; Smirlock Realty Corp. v Title Guar. Co., 52 NY2d 179).' '"[T]he liability of the title insurer to its insured is essentially based on contract law [and] is governed and limited to agreements, terms and conditions and provisions contained in the title insurance policy"'(Citibank v Commonwealth Land Tit. Ins. Co., 228 AD2d 635, quoting 5A Warren's Weed, New York Real Property, Title Insurance, § 1.03[6], at 15 [4th ed])" Logan v Barretto, 251 AD2d 552, 552-553).
It is well settled that a "'title insurer's obligation to indemnify is defined by the policy itself and limited to the loss in value of the title as a result of title defects against which the policy insures'." As the Court of Appeals stated in Smirlock Realty Corp. v Title Guar. Co. (52 NY2d 179,188 [1981]), "a policy of title insurance is a contract by which the title insurer agrees to indemnify its insured for loss occasioned by a defect in title." "Such a policy entitles the insured to indemnity only to the extent that its security is impaired and to the extent of the resulting loss which it sustains" (Diversified Mtge. Investors v U.S. Life Tit. Ins. Co., 544 F2d 571, 574-575, n 2 [2d Cir 1976] quoted inCitibank, N. A. v Chicago Title Ins. Co., 214 AD2d 212, 223;see also Darbonne v Goldberger, 31 AD3d 693); Brucha Mtge. Bankers Corp. v Nations Tit. Ins. of N.Y., 275 AD2d 337, 337-338, [2000]).
In order to establish a prima facie case in an action to benefits under a title insurance policy the plaintiff must prove that (1) the defendant issued a title insurance policy covering the plaintiff's property or property interest and designating the plaintiff or the person through whom the plaintiff is claiming benefits as the named beneficiary; (2) the plaintiff's title proved to be defective, encumbered, or unmarketable; (3) the defect, encumbrance, or other matter affecting the plaintiff's interest was within the scope of coverage of the title insurance policy; (4) the plaintiff sustained an actual loss resulting from the defect, encumbrance, or other matter; and (5) the plaintiff duly filed a claim for title insurance benefits and that claim was denied by the defendant (see 18 Causes of Action 775 [2008]).
Here, the title insurance policy insures, as of the date of the policy, against loss or damage, "sustained or incurred by the insured by reason of: 1. Title to the estate or interest described in Schedule A being vested in other than as stated therein; 2. Any defect in or lien or encumbrance on the title; 3. Unmarketability of the title; 4. Lack of a right of access to the land." Since the lis pendens, an encumbrance on the real property, was not excluded from coverage the subject title insurance provides coverage for any lien arising out of the lis pendens.
Defendant's reliance upon the terms of the title insurance policy which provides that there is no coverage for "[d]efects, liens, encumbrances, adverse claims or other matters: (a) . . . assumed or agreed to by the insured claimant . . .," is misplaced. Although defendant asserts that the plaintiff assumed or agreed to the alleged defect, the dilapidated building, when it accepted the premises "as is," "as it presently exists" with "all existing violations," these terms are set forth in the contract of sale which was solely between 1786 Lafayette Avenue Corp., and Northeastern. Plaintiff was not a party to said contract of sale and it acquired the property from the purchaser pursuant to a deed. The deeds did not incorporate any terms of the contract of sale and did not make any reference to the condition of the real property or any improvements.
The title insurance policy also provides that "[i]f the recording date of the instruments creating the insured interest is later than the policy date, such policy shall also cover intervening liens or encumbrances. . . ." Here, the deeds creating the insured interest in the subject property were not recorded until May 18, 2004, and the demolition costs imposed by the City of New York on prior to this date constitute an intervening lien. The provisions of the title insurance policy, therefore, are applicable and plaintiff has stated a cause of action for breach of contract.
As regards the second cause of action for negligence, Washington asserts that this claim is expressly precluded by the terms of the title insurance policy which provides that "(b)[a]ny claim of loss or damage, whether or not based on negligence, and which arises out of the status of . . . the title to the estate of interest covered hereby or by any action asserting such a claim, shall be restricted to the policy." Washington also asserts that plaintiff has failed to demonstrate that Washington owed it an legal duty independent of the title insurance policy. Washington's reliance upon the terms of the title insurance policy is misplaced. Plaintiff's allegations that the defendant, through its agent, undertook to record the deeds, but failed to do so in a timely manner, state a cognizable cause of action to recover damages for negligence which is independent of the parties' contract of insurance (see Gem Servs. of N. Y., Inc. v. United Gen. Tit. Ins. Co., 28 AD3d 516; Cruz v Commonwealth Land Tit. Ins. Co., 157 AD2d 333).
Plaintiff's assertion that Washington had admitted liability on these claims is rejected. There is no evidence that Washington made any such statements or that it authorized its insurer First American, to make any statements on its behalf. Therefore, statements made First American with regard to it's own indemnity obligations to its insured, do not constitute an admission on the part of Washington.
Plaintiff cannot succeed on its claims absent evidence that it sustained an actual loss. Neither Bronx, LLC nor defendant Washington has submitted any evidence as to the date the subject building was actually demolished. Mr. Makhani, at his deposition, did not recall when he visited the property and only became aware of the fact that the subject building had been demolished after he applied for the demolition permit. The documentary evidence pertaining to the subject building consists of the following:
A title company report which lists a demolition award for 761 Beach Avenue, Bronx, on May 22, 2003, and completed on January 21, 2004. The amount paid was $69,969.00, plus sales tax of $6,034.83, and an administrative fee of $75.00, for a total of $76,496.65. A lien in that amount has been placed on the property.
A copy of the Department of Buildings work permit data, taken from the agency's website, which states that a work permit for the demolition at 761 Beach Avenue was issued on July 15, 2003, to Gateway Demo; that the proposed job start was July 15, 2003; that the permit expired on January 1, 2004; and that the last action was "SIGNED OFF 01/21/04(X)."
An asbestos report on a New York City Department of Environmental Protection form which lists the building owner as President Inc., and states that an asbestos examination was conducted at the subject premises on November 15, 2003.
An application for a permit for demolition and removal and for a construction fence for the subject building on Block 3597 Lot 40, executed on January 1, 2004, by Joseph Makhani on behalf of President Inc, and filed with the DOB on March 16, 2004. This application lists the estimated cost of demolition as $10,000.00.
In the action for breach of contract, Bronx LLC seeks to recover the sum of $210,000.00, the full value of the policy. The proper measure of damages, however, is the difference between the $76,496.65 lien imposed by the City of New York for the demolition, and the amount it would have cost plaintiff to either rehabilitate or demolish the building, in response to the lis pendens. Mr. Makhani's deposition testimony establishes that the building was uninhabited, unfinished, lacked heat, electricity, plumbing, utilities, and some windows, and therefore at a minimum was in need of rehabilitation. Plaintiff, in opposition to the defendant's motion to dismiss, has failed to submit any evidence regarding an attempt to rehabilitate the subject building. Mr. Makhani asserts that the plaintiff acquired the property with the intention, among other things, that the building would be rehabilitated and the vacant lots developed and sold. However, at his deposition he stated that he did not hire an architect or engineer to inspect the building and has offered no evidence other than his self-serving statements that the building could have been rehabilitated.
The evidence submitted establishes that as of January 1, 2004 plaintiff intended to demolish the building, and was apparently unaware of the fact that it had already been demolished. Plaintiff's claim that the cost of demolition would have been $10,000.00, is based upon the estimated amount listed in the January 1, 2004 permit application. This application was prepared by Easa Moulana, on behalf of Mr. Makhani. Mr. Moulana testified that he did not know how the $10,000.00 figure was arrived at, and that Makhani supplied this figure. Mr. Makhani, self-serving statements that his company could have done the job for $10,000.00, is insufficient to establish the actual cost of demolition.
Notably, Mr. Makhani has not submitted a break down of the actual costs of demolishing the structure, including labor and equipment costs. In addition, although Mr. Makhani asserts that he would have reused certain materials after the demolition and that these materials were worth $40,000.00, he has offered no evidence as to how he arrived at this figure. Plaintiff has not proffered an affidavit from an expert as to the demolition costs or the value of salvaged materials, and Mr. Makahni's self-serving statements regarding the cost of demolition and the value of the materials is insufficient to establish actual loss, or raise a triable issue of fact as to damages. Therefore, in the absence of proof of actual loss, that branch of defendant's motion which seeks to dismiss the first cause of action for breach of contract is granted.
With regard to the second cause of action for negligence, plaintiff asserts that the damages incurred is the loss of the building, and seeks to recover the sum of $350,000.00. Mr. Makhani testified at his deposition that he believed that the building in its unfinished state was worth $350,000.00. However he stated that he never had the building appraised and was unaware of the appraisal conducted by the seller, Northeastern, which stated that the building had zero value. In opposition to the within motion, plaintiff has failed to proffer an expert affidavit as to the actual value of the subject building. Mr. Makhani's self-serving statements are insufficient to establish the actual value of the subject building and thus insufficient to establish actual loss and do not raise a triable issue of fact as to damages. Therefore, that branch of defendant's motion which seeks to dismiss the second cause of action for negligence is granted.
Accordingly, defendant's motion to dismiss the complaint is granted in its entirety, and plaintiff's cross motion for summary judgment is denied as untimely.