Raifman v Bruce & Payne Assoc. Inc.
Annotate this CaseDecided on February 24, 2005
District Court, Suffolk County
Mark Raifman, Plaintiff,
against
Bruce & Payne Assoc. Inc., Defendant.
HUSC 462-04
C. Stephen Hackeling, J.
By complaint dated June 6, 2004; the plaintiff, Mark Raifman, seeks to recover $3,500.00 from defendant Bruce A. Payne Assoc. Inc., under alternative legal theories: specifically that the plaintiff is a third party beneficiary of a contract and based upon negligence.
Undisputed Facts
The relevant facts in this matter are not disputed. Plaintiff is the purchaser of a one-quarter
acre lot [which is part of a four parcel subdivision] which lot was previously owned by non-party Redco Development Corp. (of Hewlett, NY). Redco had previously obtained approval to subdivide the original one-acre lot into four, buildable quarter acre lots. A condition of the subdivision approval required that the four deeds and the subdivision forms pertaining to the four separate parcels, had to be filed by April 3, 2004.
Defendant, Bruce Payne Associates, Inc. was an independent closing agent (of a title company) at a closing of one of the first of four lots comprising the proposed subdivision. At this first closing, Bruce Payne Associates, Inc. undertook to file four deeds, including the deed pertaining to the lot which the instant plaintiff subsequently purchased. The defendant and the attorney for Redco had an oral understanding at this closing as to what the defendant promised to do for Redco. Thereafter, the plaintiff herein attended the closing on his parcel on March 31, 2003, at which time he was furnished with an affidavit by Redco's attorney, wherein Redco stated that it was in possession of four deeds and that Redco would file same "simultaneously", in order that the subdivision condition could be met and the four lots would become part of a legal subdivision. The within defendant was not present at the closing of the plaintiff's lot and the defendant did not make any representations to plaintiff or undertake any acts, as it was not the closing agent on this transaction. [*1]
The Nassau County Clerk accepted the subject deeds for recording (after the April 3rd deadline) on August 8, 2004 ,after requiring that the plaintiff obtain an extension of time to file the Redco subdivision map and deeds.
Disputed Issue of Fact
The single disputed issue of fact is whether the defendant tendered the subject deeds to the Nassau County Clerk prior to April 3, 2004. The plaintiff asserts that the defendant did not deliver the subject deeds prior to the April 3, 2004 deadline. The defendant testified that he timely did appear to file same and was refused by the Clerk, with the instruction that subdivision maps and deeds could only be filed after making an appointment with the County Clerk. It was asserted that the earliest appointment available was the following week, after the April 3, 2004 deadline. When the defendant appeared for his appointment, his attempted filing of the four deeds was again refused, as the April 3, 2004 filing deadline had passed. This refusal necessitated three months of renewed applications and hearings before the Planning Commission which resulted in an eventual August 3, 2004 filing, costing thousands of dollars in filing and attorneys fees for both the plaintiff and the defendant. Plaintiff seeks $3,500.00 for his alleged attorney's fees paid to the firm of Jerome Raifman, Esq. (to obtain the filing extension).
The Court finds as a matter of fact that the defendant proffered the deeds for filing prior to April 3, 2004 and that same were refused by the Nassau County Clerk. The Court adopts the defendant's assertion that the Nassau County Clerk required an appointment in order to accomplish such a filing and that the Clerk told the defendant that no appointments were available until after April 3, 2004. While plaintiff attempted to controvert this fact, he offered no personal knowledge testimony or documentation to rebut the defendant's sworn testimony.
Issues Presented
May the plaintiff recover from the defendant based on the theory that the plaintiff is a third party beneficiary of defendant's contract with Redco, or upon the theory of negligence?
Contract (Third Party Beneficiary)
The defendant was not a party to the plaintiff's real estate contract, nor was he an agent of either party or of the involved title company. Absent same, the only arguable contractual theory of liability is that the plaintiff is a " third party beneficiary" of the contractual agreement between Redco Development Corp. (original owner of the four parcels) and Bruce & Payne Associates Inc. (the independent title closer).
A party claiming to be a third-party beneficiary [under a contract] has the burden of demonstrating that he has an enforceable right [under the contract]. Airco Alloys Div., Airco Inc. vs. Niagara Mohawk Power Corp. 76 AD2d 68,70 (NYAD 4th Dept. 1980) ; Flemington National Bank & Trust Co. vs. Domler Leasing Corp., 65 AD2d 29 (NYAD 1st Dept 1978). A [*2]party asserting rights as a third-party beneficiary must establish " (1) the existence of a valid binding contract between other parties, (2) that the contract was intended for his benefit [that he is an intended beneficiary, not an incidental beneficiary] and (3) that the benefit to him is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate him if the benefit is lost". Burns, Jackson, Miller, Summit & Spitzer vs. Lindner 59 NY2d 314, 336 (NY 1983 ) Cal. Pub. Emples. Ret. Sys. vs. Sherman & Sterling, 95 NY2d 427, 435 (NY 2000); see Fourth Ocean Putnam Corp. vs. Interstate Wrecking Co., 66 NY2d 38 (NY 1985).
An incidental beneficiary is defined simply as one who is not an intended beneficiary [Fourth Ocean Putnam Corp. vs. Interstate Wrecking Co.,supra ]. An incidental beneficiary is a third-party who may derive benefit from the performance of a contract though he is neither the promisee nor the one to whom performance is to be rendered. Airco Alloys Div., Airco, Inc. vs. Niagara Mohawk Power Corp., supra et 79. An incidental beneficiary has no right to enforce the contract (Fourth Ocean Putnam Corp. vs. Interstate Wrecking Co., supra) or to recover based upon a breach thereof. "Essential to the status as an intended beneficiary is that either (1) performance of the underlying promise will satisfy an obligation of the promisee to pay money to the beneficiary (inapplicable here) or (2) the circumstances indicate that the promisee intends to give the beneficiary the benefit of the promised performance. It is the intention of the promisee which controls the determination of third-party beneficiary status ... It is necessary not merely that the contract shall operate for the benefit of the third person, but that it shall have been so intended. It is not sufficient that the performance of the covenant may benefit a third person, nor that the third person relied upon the performance thereof. Thus, the agreement under which the third party claims must clearly express an intention to assume a duty directly to him." 22 NY Jur, 2d 3, Contracts 304 (2003); Milliken vs. Consolidated Edison Co. of New York, 84 NY2d 469 (NY 1994).
At the trial herein, no testimony was presented by any agent or associate of Redco Development Corp. Neither was there any testimony presented by the attorney who represented Redco at the closing which occurred prior to the closing on the plaintiff's parcel; this person being the one who hired the defendant to file the four deeds involved. The testimony of Bruce & Payne did not establish the plaintiff's status as the intended beneficiary of the agreement regarding the filing of the deeds. The testimony did not establish that such contract was made for the plaintiff's benefit. Absent such proof, the plaintiff did not meet its burden of proof, which was to demonstrate that he has an enforceable right. The Court does not regard the plaintiff as an intended beneficiary, possessing the right to collect damages by reason of the defendant's breach of his promises to Redco.[FN1]Accordingly, this Court cannot award judgment to plaintiff on the theory that the plaintiff was a third party beneficiary to said contract.
The Court further notes that "even when the contracting parties specifically intend to confer benefits on a third party, not all consequential damages which flow from a breach of the contract are recoverable by the third party The contract must evince a discernible intent to allow recovery for the specific damages to the third party that results from a breach thereof before a cause of action is "Stated" (Kornblut vs. Chevron Oil CO., 62 AD2d 831 (NYAD 2d Dept 1978), affd 48 NY2d NY2d 853).Strauss vs. Belle Realty Co., 98 AD2d 424,427, (NYAD 2d 1983).
Negligence
The plaintiff has not established defendant's liability in negligence. Under certain facts, a contractual obligation creates a duty of care from which negligence liability may arise. Such liability arises due to the failure to perform an activity with due care, not by reason of the defendant's breach of the contract. "Contractual obligations do not generally give rise to tort liability in favor of third parties who are outside the contract because, as a matter of policy, liability should not be extended to a potentially indefinitie number of possible beneficiaries. On the other hand, there are... three situations defined by the Court of Appeals, as those which party who owes a contractual duty to render services may assume a duty of care to third parties. ... They are (1) when the contracting party in failing to exercise reasonable care in the performance of contractual duties, launches a force or instrument of harm; (2) when the plaintiff detrimentally relies on the contracted performance of the contracting party's duties and (3) when the contracting party has entirely displaced the other contracting party's duty to safely maintain the premises. 1 A-5 Warren's Negligence in New York Courts Sec 5.03 (4) (a); Espinel vs. Melville Snow Contractors Inc., 98 NY2d 136 (NY 1983). No recovery may be imposed unless the facts fit in to one of these three situations.
After its review of numerous cases, the Court concludes that the facts involved herein do not meet any of the three factual scenarios laid out in Espinel. " It is the responsibility of the courts in fixing the orbit of duty, to "limit the legal consequences of wrongs to a controllable degree"... and to protect against crushing exposure to liability". Strauss vs. Belle Realty Co., 65 NY2d 399,402, (NY 1985) citing Tobin vs.Grossman, 24 NY2d 609, 619 (NY 1969), " In fixing the bounds of that duty...policy plays an important role". DeAngelo vs. Lutheran Medical Center, 58 NY2d 1053, 1055 (NY 1983).
It is generally accepted that a title abstracter is "liable for damages resulting from errors [*3]in or omissions from the prepared abstract, in the absence of fraud or collusion, solely to the person who contracted for the preparation of said abstract". Calamari vs. Grace, 74 AD2d 74 (NYAD2d 1983) If no such privity of contract exists between the defendant abstractor and the plaintiff, only a cause of action against the abstracter sounding in fraud for gross errors may be recognized. Cecala vs. Title Guar. Co., 45 Misc 2d 986 ( NY Sup. Ct. 1965)
For the above reasons the court enters judgment in favor of the defendant, dismissing the plaintiff's complaint.
Dated: February 24, 2005 ________________________
J.D.C.
Footnotes
Footnote 1:The Court is cognizant of the fact that the Title Insurance Industry in New York often employs independent title closers to appear at real estate closings. They appear as acknowledged agents of the title company to actually issue the policy upon payment of a premium and to indicate all the title policy exclusions and omissions. The closer handles the filing of deeds and mortgages and satisfactions of liens as a hybrid agent on behalf of the company and all parties. The fees for this service are charged separately. There is no reasonable expectation that anyone other than the title company is acting as a "surety or guarantor" that the subject deeds, satisfactions or other documents will be accepted by the Court Clerk for recording. In this instance the closer charged nominal fees to act more as a messenger. It is interesting to note that the title company is not a party to this action.
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