Peretz Strahl, Inc. v Fidelity Natl. Tit. Ins. of N.Y.
Annotate this CaseDecided on August 31, 2005
Supreme Court, Kings County
Peretz Strahl, Inc., Plaintiff,
against
Fidelity National Title Insurance Of New York., Defendants.
35654 / 2004
Wayne P Saitta, J.
The Defendant, FIDELITY NATIONAL TITLE INSURANCE OF NEW YORK moved pursuant to C.P.L.R. § 3211 (a) for an Order dismissing Plaintiff's Complaint with prejudice for failure to state a cause of action. Plaintiff, PERETZ STRAHL INC., cross moves for summary judgment pursuant to CPLR 3212.
Upon review and consideration of Defendant's the Notice of Motion and the attached Affidavit of Irwin J. Weinstein dated February 8 2005, and Affirmation of Maria Siders Frazis, dated February 9th, 2005; Plaintiff, PERETZ STRAHL, INC.'s Notice of Cross Motion, and Affirmation in Support in Cross Motion and In Opposition to the Motion, of Scott Goldberg, dated March 8th, 2005 and annexed exhibits; Defendant's Attorney's Affirmation in Further Support of Motion to Dismiss and in Opposition to Cross Motion dated March 24, 2005 and annexed exhibits; and Plaintiff's Reply Affirmation in Further Support of the Cross-Motion and in Opposition to the Motion dated March 28th, 2005, all exhibits annexed thereto, all the proceedings heretofore had herein and after argument of counsel and due deliberation thereon, the motion and cross motion are denied for the reasons set forth below.
FACTS AND ARGUMENTSThis is an action for a judgment, declaring that the title insurance policy issued by Defendant to Plaintiff provided coverage for an emergency repair lien in the amount of $29,975 against the building, and that defendant is required to pay plaintiff that sum pursuant to the policy.
Plaintiff purchased the apartment building located at 232 Meserole Street, Brooklyn New York and purchased title insurance coverage from defendant. The sale took place on March 18 1999 and the Emergency Repair that is in dispute was not reduced to a lien until April 23, 1999. It is [*2]uncontested that the work for which the lien was placed was done before the closing, in September of 1998.
Defendant conducted an Emergency Repair search which revealed that there were no emergency repair liens on record through April 1 1998 and that "no emergency repairs had been given out" since that date. The search was through August 24 1998 and no continuance was ordered by plaintiff or done by defendant. The emergency repair work which resulted in the contested lien was done on September 23rd and 24th of 1998.
Defendant argues that the emergency repair lien was not covered by the policy because paragraph 4 of schedule B of the title policy states that the "Policy does not insure against Emergency Repair Liens or Tax Liens unless entered in the records of the Dept. of Finance of the City of New York, prior to closing."
Defendant also relies on paragraph 1 if the policy which generally excludes liens attaching after the date of the policy, or which arise from any law "except to the extent that a notice of Enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation . . .has been recorded in the public records at Date of Policy."
Plaintiff counters that the exception contained in paragraph 4 of schedule B of the policy (which was also contained in paragraph 7 of the title certificate) was specifically omitted by the Defendant's closer at the closing and can not properly be unilaterally added back to the policy after the closing. Plaintiff also asserts that paragraph 1 is pre-printed boiler plate language that is contradicted by the specific omitting of paragraph 7 of the title certificate. Plaintiff further argues that since violations and fines for the conditions for which the Emergency Repair was done, were of record at the time of closing there was adequate notice.
The Title policy also contains an endorsement which states:
"1. The following is added to the insuring provisions on the face page of this policy:
5. Any statutory lien for services, labor or materials furnished prior to the date hereof and which has now gained or which may hereafter gain priority over the estate or interest of the insured as shown in Schedule A of this policy."
ANALYSIS
The first question to be determined is whether the policy excludes emergency repairs unless the lien for the repair was entered by the date of the closing. This exception was contained in both paragraph 7 of the title certificate and paragraph 4 of schedule B of the title policy. The specific exception to coverage was omitted by the parties at the closing. Plaintiff denies agreeing to have the exception restored to the policy and claims that defendants added the provision back unilaterally. Defendant does not deny that the exception was restored unilaterally but contends that the policy should take precedence over the marked up title certificate.
It is clear that the marked up title certificate represents the agreement of the parties as to what items were to be covered under the policy and what items excluded. Absent any evidence that there was a subsequent agreement to modify the agreement, the title policy can not alter the agreement [*3]memorialized by the marked up title certificate. Here there is no evidence that plaintiffs agreed to the terms of paragraph 4 of schedule B of the title policy.
Defendant's argument that its closer only omitted the exception in paragraph 7 because its search revealed no emergency repairs liens or any emergency repair work in progress, is unconvincing. Given that the purpose of the exception was to exclude coverage of liens that may accrue after the policy, for work done before the policy, there is no logic in omitting the exception because no liens or record of work were found in a search that was done seven months prior to closing and was never updated.
Further, the pre-printed language in paragraph 1 of the policy does not override the agreement at closing to omit the specific exception relating to emergency repairs that result in post closing liens.
Also, the policy contains an endorsement, referred to above, which provides coverage for a statutory lien for labor and materials furnished before the date of the policy which "may hereafter" result in a lien. This endorsement clearly covers a lien such as the emergency repair lien in question, which was for material and labor furnished before the policy and which became a statutory lien after the closing.
By reason of the foregoing, the title insurance coverage agreed to by the parties does not exclude emergency repairs filed after closing, for repairs done before closing.
That having been said, it still remains to be determined whether there was a public record before the closing, that the work was done, or ordered to be done.
Plaintiff cites violations of record for the condition the for which the emergency repair was made, as well as Environmental Control Board (ECB) fines for those violations, as proof that there was notice of the emergency repair. Its reliance on the violations is misplaced. Although they may have been issued for the same conditions, violations and ECB fines are separate matters from emergency repairs.
A violation signifies that a City inspector has recorded a condition at a building that violates a City regulation or code. While the owner has a legal obligation to correct the violation, the mere issuance of the violation does not mean that the City will necessarily take any action to enforce the owner's obligation to repair. In fact, the City takes no enforcement action in regards to the overwhelming majority of violations issued . Even when the City undertakes enforcement action, that does necessarily result in a fine
Emergency repairs are another matter entirely. The City undertakes to do emergency repairs on a relatively small number of conditions it considers to be of an emergency nature. The fact that a violation is issued for a particular condition or even that a fine was imposed for the condition, is no indication that City is going to undertake an emergency repair of that condition. The decision to do an emergency repair is a separate and distinct determination from issuing a violation or seeking a fine.
As such, neither violations or fines, constitute notice or a record of emergency repair work, even where they involve the same underlying conditions.
The City does however, maintain records not only of emergency repair liens, but also of a purchase and work orders issued for emergency repairs . Unlike violations, once an emergency repair is done then a lien will definitely issue for the cost of the repair.
Thus, notice that a purchase or work order for an emergency repair has been issued, is [*4]sufficient to put a potential buyer on notice that a lien for the work will be entered. The emergency repair search conducted by Defendant searched for both emergency repair liens and emergency repairs that had been "given out".
The New York Department of Housing Preservation and Development is required pursuant to Section 27-2144 a of the NYC Administrative Code keep a record of all emergency repair work performed by or on behalf of the Department. This section also provides:
"Such records shall be kept on a building-by-building basis and shall be accessible to the public during business hours. Within thirty days of the issuance of a purchase or work order to cause a repair to be made by or on behalf of the department, entry of such order shall be made on the records of the department. Such entry shall constitute notice to all parties." NYC Admin. Code Sec. 27-2144
Thus, if the City made an entry of the repair or the purchase order for the repair in question, before the closing date, then the lien for the repair would be covered by the policy because there was public notice of the work which resulted in the lien. This is so even though no emergency repair search update was ordered or done, because the exception from coverage of emergency repair liens occurring after closing, which resulted from work done prior to closing, was omitted by the parties.
The entry of the repair, or the purchase or work order for the repair, and the date such entry was made, is important for another reason.
Subsection b of section 27-2144 provides in part that no emergency repair lien:
". . .shall be enforced against a subsequent purchaser in good faith or mortgagee in good faith unless the requirements of subdivision a of this section are satisfied; this limitation shall only apply to transactions occurring after the date such record should have been entered pursuant to subdivision a and the date such entry was made."
Since the work was done on September 23- 24 1998, the closing took place after the date the entry should have occurred. Therefore, if the entry was not made by the time of closing then the lien would not be enforceable against the plaintiff and would not be covered by the policy.
If the entry was made before the closing, than it would have constituted public notice of the work, and the lien resulting from the work would have been covered by the policy.
None of the papers submitted in support or opposition to the motion and cross motion establish when record of the of emergency repair, or of a purchase or work order for the repair, was entered. This is an open question of fact that must be resolved before it can be decided whether the contested lien is covered by the policy or not.
By reason of the foregoing, both the motion to dismiss and the cross-motion for summary judgment are denied.
This shall constitute the decision and order of this Court.
E N T E R ,
__________________________
WAYNE P. SAITTA, J.S.C.
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