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holding that the plaintiff failed to establish fraud where a term not included in an initial real estate contract was later added to the final deed, because the term was added under the belief that it reflected the parties' intent and the plaintiff could have discovered the added term by reading the deed but failed to do so
Summary of this case from Ill. Union Ins. Co. v. Midwood Lumber & Millwork, Inc.Opinion
2014-05-22
TIMBER RATTLESNAKE, LLC, Appellant, v. Don DEVINE et al., as Executors of the Estate of Benjamin Ira Wechsler, Also Known as Benjamin Wechsler, Deceased, Respondents. (And a Third–Party Action.).
MacCartney, MacCartney, Kerrigan & MacCartney, Nyack (William K. Kerrigan of counsel), for appellant. Nixon Peabody, LLP, Albany (Daniel J. Hurteau of counsel), for respondents.
MacCartney, MacCartney, Kerrigan & MacCartney, Nyack (William K. Kerrigan of counsel), for appellant. Nixon Peabody, LLP, Albany (Daniel J. Hurteau of counsel), for respondents.
Before: STEIN, J.P., McCARTHY, ROSE and EGAN JR., JJ.
STEIN, J.P.
Appeal from an order of the Supreme Court (Breslin, J.), entered April 4, 2013 in Sullivan County, upon a decision of the court partially in favor of defendants.
In 2004, Stuart Salenger entered into a contract with Benjamin Wechsler (hereinafter decedent) to purchase 7.21 acres of unimproved real property. Salenger subsequently assigned the contract to plaintiff, of which he was the sole member and principal. A closing was thereafter held, at which time decedent delivered a deed to plaintiff that was later recorded. After discovering that the deed contained a restrictive covenant that had not been referenced in the contract of sale, Salenger requested that decedent correct the deed. Decedent refused and plaintiff commenced this action seeking, among other things, reformation of the deed. Prior to trial, decedent died and defendants—the executors of decedent's estate—were substituted for him in the action. Following a nonjury trial, Supreme Court determined, among other things, that plaintiff had not established grounds for reformation. This appeal by plaintiff ensued.
The restrictive covenant provided that “the premises may only be used for residential purposes by no more than two (2) families and no clubs, associations, or organizations may use or occupy the premises.”
Decedent also commenced an action against Salenger and plaintiff, seeking, among other things, rescission of the contract based on mutual mistake in regard to a right-of-way contained in the deed. The two actions were later consolidated and, in the same order now on appeal, Supreme Court determined that decedent was not entitled to rescission. Defendants did not appeal from Supreme Court's order.
We affirm. “A party seeking reformation must establish, by clear and convincing evidence, that the writing in question was executed under mutual mistake or unilateral mistake coupled with fraud” ( Vollbrecht v. Jacobson, 40 A.D.3d 1243, 1245, 838 N.Y.S.2d 188 [2007] [internal quotation marks and citations omitted]; accord Herron v. Essex Ins. Co., 34 A.D.3d 913, 914, 823 N.Y.S.2d 571 [2006],lv. dismissed8 N.Y.3d 856, 831 N.Y.S.2d 103, 863 N.E.2d 107 [2007];see Fabi v. Hayes, 97 A.D.3d 1049, 1050, 949 N.Y.S.2d 261 [2012],lv. denied20 N.Y.3d 855, 2013 WL 69098 [2013] ). The burden is on the proponent of reformation to establish, by clear and convincing evidence, that the relief is warranted ( see Fabi v. Hayes, 97 A.D.3d at 1050, 949 N.Y.S.2d 261;Carpenter v. Morrette, 36 A.D.3d 1115, 1116, 829 N.Y.S.2d 246 [2007];see also Kaliontzakis v. Papadakos, 69 A.D.3d 803, 804, 892 N.Y.S.2d 542 [2010];M.S.B. Dev. Co., Inc. v. Lopes, 38 A.D.3d 723, 725, 832 N.Y.S.2d 95 [2007] ).
Here, it is undisputed that the deed's restrictive covenant was not set forth in the contract of sale and Salenger testified that he first became aware of it when he received the deed after the closing. Thus, plaintiff established the existence of a unilateral mistake regarding whether the restrictive covenant was intended to be included as a condition of the sale. Nonetheless, plaintiff's proof fell short of establishing fraud on decedent's part, which requires “ ‘a misrepresentation that is false and that the defendant knows is false, made to induce the other party to rely on it, justifiable reliance on the misrepresentation by the other party, and injury’ ” ( Sutton v. Hafner Valuation Group, Inc., 115 A.D.3d 1039, 1041, 982 N.Y.S.2d 185 [2014], quoting DerOhannesian v. City of Albany, 110 A.D.3d 1288, 1292, 975 N.Y.S.2d 188 [2013],lv. denied 22 N.Y.3d 862, 2014 WL 642724 [2014] ). Decedent's attorney testified that he believed the parties had intended to include the restrictive covenant in the deed and that he added it to the proposed deed after he realized that it had been omitted therefrom. Prior to the closing, decedent's attorney had his legal assistant send the deed containing the restrictive covenant to the title insurance company by facsimile and contact plaintiff's attorney regarding the deed. Although some negative inferences could be drawn from the fact that decedent and his representatives failed to ensure that plaintiff's attorney was actually informed of the addition to the deed before the closing, other credible evidence suggested that decedent's counsel made efforts to so inform plaintiff. The attorney who appeared for decedent at the closing further provided the deed to plaintiff's attorney at the closing. Notably, the restrictive covenant language is clearly evident on the face of the executed deed and would easily have been discovered with even a cursory examination. Decedent's attorney testified that he had no intention of deceiving plaintiff. Under these circumstances, plaintiff failed to establish that decedent intended to induce its reliance on any misrepresentation.
Plaintiff does not allege the existence of a mutual mistake.
The legal assistant testified that she called the title company and followed up with a fax. She further testified that she did not reach plaintiff's attorney when she called him, but left a message indicating that there was a problem with the description in the deed.
Apparently, the attorney who had been representing decedent throughout the transaction was unable to attend the closing and sent someone on his behalf.
Plaintiff also failed to meet its burden of demonstrating reasonable reliance on any misrepresentation made by decedent, inasmuch as decedent's attorney had not previously forwarded a proposed deed to plaintiff's attorney for his review and plaintiff's attorney conceded that he failed to examine the deed at the closing. Accordingly, after exercising our broad authority to independently review the evidence presented and giving due deference to Supreme Court's credibility assessments ( see Paterno v. Strimling, 107 A.D.3d 1233, 1235, 968 N.Y.S.2d 643 [2013];Fabi v. Hayes, 97 A.D.3d at 1049–1050, 949 N.Y.S.2d 261;Haber v. Gutmann, 64 A.D.3d 1106, 1107, 882 N.Y.S.2d 780 [2009],lv. denied13 N.Y.3d 711, 2009 WL 4017060 [2009] ), we discern no basis to disturb Supreme Court's determination that plaintiff failed to meet its burden of establishing its entitlement to reformation of the deed. Consequently, plaintiff's request for counsel fees is denied.
ORDERED that the order is affirmed, with costs.