Hartford Acc. & Indem. Co. v ABC Pac. Realty, LLC

[*1] Hartford Acc. & Indem. Co. v ABC Pac. Realty, LLC 2006 NY Slip Op 50921(U) [12 Misc 3d 1155(A)] Decided on March 23, 2006 Supreme Court, Sullivan County Sackett, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on March 23, 2006
Supreme Court, Sullivan County

Hartford Accident & Indemnity Company, a/s/o Gabrielle Card & Gift, d/b/a Sandee's Hallmark, Plaintiff,

against

ABC Pacific Realty, LLC, A.P. Equity, Inc. and Unkechaug Indian Nation, Defendants.



1684/05



Robinson & Cole, LLP

Attorneys for Plaintiff

P.O. Box 10305

Stamford, CT 06904-2305

Melissa Sullivan, Esq., of Counsel

Marvin Newberg, Esq.

Attorney for Defendant ABC Pacific Realty, LLC

33 North Street

Monticello, New York 12701

Orseck Law Offices

Attorneys for Defendant A.P. Equity, Inc.

1924 State Route 52- PO Box 469

Liberty, New York 12754-0469

Gerald Orseck, Esq., of Counsel

Robert D. Werth, Esq.

Attorney for Defendant Unkechaug Indian Nation

145 East 35th Street, Suite No.1 ME

New York, New York 10016

Robert A. Sackett, J.

In this subrogation action by plaintiff seeking to recover sums it paid to its insured for water damage which occurred at the Apollo Mall in Monticello, Sullivan County, New York,

defendants ABC Pacific Realty, LLC ["ABC Pacific"] , and A.P. Equity, Inc. ["A.P. Equity"], each by separate motion, move pursuant to CPLR 3212 for summary judgment dismissing the complaint as against them. Defendants also seek costs and an award of attorneys' fees for filing a frivolous claim pursuant to 22 NYCRR §130 - 1.1. Defendant Unkechaug Indian Nation ["Unkechaug Nation"] moves pursuant to CPLR 3211(a)2) to dismiss the summons and complaint and cross-claims by defendants on the ground that the Court lacks subject matter jurisdiction over said defendant [FN1].

Plaintiff appears and opposes the motions.

In April 1987, the Sullivan County Industrial Development Agency ["Sullivan County IDA"] leased the property to Apollo Plaza Associates, which was the predecessor in interest to defendant A.P. Equity, pursuant to a ground lease in connection with IDA bond financing for the original development of the property. In connection therewith, Apollo Plaza Associates signed a note and mortgage to the Bank of Kuwait, with IDA as debtor. The note and mortgage was assigned to defendant ABC Pacific.

In April 2002, despite the fact that it did not at the time own the property, A.P. Equity executed and delivered a deed for the Mall to the Unkechaug Nation. However, the Sullivan County IDA transferred title to A.P. Equities on May 3, 2002. Shortly thereafter, on May 7, 2002, A.P. Equity executed a correction deed to the Unkechaug Nation.

In sum, plaintiff's insured was a tenant in the Apollo Mall [the "Mall"] who sustained flooding and damages in an amount in excess of $350,000 stemming from an alleged rupture in the mall's sprinkler system on January 20, 2003. It is undisputed that prior to the loss, the Mall was in disrepair. The insured made a claim and was paid under its policy of insurance issued by the plaintiff for the damages resulting from the rupture. Plaintiff now seeks to recover these damages from defendants based, in part, on the fact that defendants "owned, operated and/or controlled the Apollo Mall" (Complaint, ¶15) on the date of the casualty loss.

ABC Pacific's Motion for Summary Judgment

In support of its motion, ABC Pacific argues that it was neither the owner nor the operator of the Mall, nor was it in possession or control of same. To this end, ABC proffers the referee's deed as evidence that ABC Pacific did not take title to the Mall property until February 24, 2003, after the occurrence of the incident in question. ABC Pacific further refers this Court to the documentary evidence submitted by co-defendant Unkechaug Nation on its summary judgment motion which unequivocally demonstrates that the Unkechaug was the owner of the subject premises. Because ABC neither owned, operated, maintained or controlled the Mall at the time of the casualty loss, it cannot be held responsible for any damages sustained therefrom (see Moran v Regency Savings Bank, F.S.B., 20 AD3d 305 [2005]). Thus, ABC has established its prima facie entitlement to summary judgment. [*2]

With respect to plaintiff's argument that ABC Pacific acquired an equitable interest in the Mall when it became the successful bidder at a foreclosure sale prior to the loss, and thus owed a duty to maintain the Mall, the Court finds no legal or factual predicate to support such claim. Plaintiff simply argues that the relevant question is whether ABC Pacific was under a duty to maintain the Mall prior to and on the date of the loss especially in its capacity as first mortgage holder, foreclosing plaintiff and successful bidder.

In its opposition papers to co-defendant A.P. Equity's motion for summary judgment, plaintiff cites to a New York Law Journal article authored by Bruce J. Bergman, Esq., in which the author states: "At least in defining the nature of the title, case law is clear that until the conveyance of the property is completed by delivery of a deed, the successful bidder at the foreclosure sale is possessed of equitable title to the premises (but not legal title)" (Bergman, Foreclosure Process and Its Netherworld: Defining Powers, Duties During Interval Between Sale and Deed Delivery Can Be Puzzling, NYLJ, Aug. 19, 2002, at 7, col 1). However, what the plaintiff neglects to point out is that the author further states that "...an equitable owner not in control of property is not likely to be liable ...for things such as torts at the property, whereas the legal owner is" (id.).

Consequently, because plaintiff has failed to establish by admissible evidence the existence of an issue of fact that ABC Pacific maintained, controlled, or owned the Mall, the Court grants said defendant's motion for summary judgment.

With respect to the imposition of sanctions, counsel for ABC Pacific argues that several months ago, he advised plaintiff's counsel that, on January 20, 2003, ABC Pacific was not in possession of the Mall nor did it maintain, control, or operate the premises, nor did it apply for a receivership of the premises during the foreclosure proceedings. Indeed, plaintiff's counsel was advised that the owner of the premises at the time of the casualty loss was the Unkechaug Indian Nation. Subsequent to that, upon receipt of the complaint, counsel for ABC Pacific wrote plaintiff's counsel and not only reiterated the above facts but enclosed for counsel's reference, a copy of the referee's deed. Counsel then asked plaintiff's counsel to voluntarily discontinue the action as against defendant ABC Pacific based on the lack of either a factual or legal basis and cited to Part 130 of the Rules of the Chief Administrator of the Courts of New York.

In response, plaintiff's counsel informed defendant's counsel that if discovery disclosed support for the facts outlined in defense counsel's letter, plaintiff said it would reconsider its position but that, for now, it intended to proceed with the litigation.

A court is empowered under 22 NYCRR part 130 to impose sanctions for frivolous conduct on the part of a litigant or attorney in a civil action and such a determination will not be disturbed absent a clear abuse of discretion (see 22 NYCRR 130-1.1[a]). "Conduct may be deemed frivolous if it is without legal merit or is unsupported by a reasonable argument, undertaken to unduly prolong litigation or to harass or injure another, or involves material false statements" (Household Bank Region I v Stickles, 276 AD2d 940, 941 [2000]; see also 22 NYCRR 130-1.1[c]). The party sanctioned must be provided a reasonable opportunity to be heard on the issue (see 22 NYCRR 130-1.1[d]), a sanction must be supported by a "written decision setting forth the conduct on which the award is based and the reasons why the court found the conduct to be frivolous and the amount of the award to be appropriate" (Citibank [South Dakota] v Coughlin, 274 AD2d 658, 659 [2000], lv denied 95 NY2d 916 [2000]; see also 22 NYCRR 130-1.2). [*3]

Here, as defendant ABC Pacific made an express request for sanctions in the motion for summary judgment, plaintiff received sufficient notice that such relief would be considered and was provided an opportunity to be heard on the issue. Notably, plaintiff has made no effort to controvert the prima facie evidence presented by defendant both in its letter of August 15, 2005, and in its submissions on the instant motion. However, despite the fact that plaintiff has already been given proper notice and an opportunity to address the issue of sanctions, the Court has scheduled argument on this issue for Friday, March 31, 2006 at 10:00 A.M. at the Lawrence H. Cooke Sullivan County Courthouse, Monticello, New York.

A.P. Equity's Motion for Summary Judgment

As a basis for its motion, A.P. Equity argues that on April 26, 2002, almost nine months prior prior to the date of the casualty loss, it had sold the real property in question to the Unkechaug Nation, and from April 26, 2002 to the present, it had no interest or connection in the Mall. In support of its argument, A.P. Equity refers this Court to a copy of the recorded deed, and the recorded corrected deed.

In opposing the motion for summary judgment, plaintiff first contends that the deed dated April 26, 2002 wherein A.P. Equity attempted to transfer title to the Mall to the Unkechaug Nation is void as a matter of law because the Sullivan County IDA, and not A.P. Equity, held title to the real property at that time. Plaintiff further argues that Gene Barbanti, who was president of A.P. Equity and who executed both the initial deed and the corrected deed, has taken inconsistent positions with respect to ownership of the Mall prior to the purported transfer from itself to the Unkechaug Nation.

The Court is not similarly persuaded. It is true that the deed dated April 26, 2002 purporting to transfer title to the Mall property from A.P. Equity to the Unkechaug Nation was null and void by reason of the fact that A.P. Equity was not the title owner at that time. However, A.P. Equity was deeded title to the real property in question shortly thereafter by the Sullivan County IDA, and plaintiff proffers no admissible evidence to indicate that the deed dated May 3, 2002 is invalid. Likewise, there is no admissible evidence to suggest that the corrected deed dated May 7, 2002 transferring title from A.P. Equity to the Unkechaug Nation is invalid. The fact that Barbanti may have taken inconsistent positions with respect to the Mall's ownership is irrelevant in the face of the documentary evidence. Clearly, based on the corrected deed, the Unkechaug Nation was the legal owner of the Mall property at the time of the loss, and not A.P. Equity, as plaintiff argues. In addition, plaintiff has proffered no evidence to indicate that defendant A.P. Equity exercised any control over the subject premises at the time of the casualty loss.

Accordingly, defendant A.P. Equity's motion for summary judgment is granted.

Conversely, the Court denies that part of defendant's motion seeking the imposition of sanctions. Based on the aforesaid facts, the Court does not conclude that plaintiff's complaint is patently frivolous as to defendant A.P. Equity.

Unkechaug Indian Nation's Motion to Dismiss

Succinctly stated, defendant Unkechaug Nation moves to dismiss the complaint and cross claims on the ground that the Court lacks subject matter jurisdiction because the Unkechaug Nation has sovereign immunity. It is fundamental that Indian tribes possess sovereign immunity [*4]from suits in state and federal courts (see Doe v Oneida Indian Nation of New York, 278 AD2d 564 [2000], lv denied 96 NY2d 716 [2001], see also Zeth v Johnson, 309 AD2d 1247 [2003]), and cannot be sued absent an express and unequivocal waiver of immunity (see Weeks Constr. v Oglala Sioux Hous. Auth., 797 F2d 668 [8th Cir 1986]).

However, plaintiff claims that the Unkechaug is not a federally-recognized Indian Tribe and, therefore, is not entitled to the sovereign immunity defense. Plaintiff cites Carruthers v Flaum, 365 F. Supp. 2d 448 (S.D.NY 2005) to justify this argument, wherein the court stated, in part, that: "Because the Unkechaug are not federally-recognized, they are neither sovereign nor can they claim preemption from state laws forbidding gambling that is extended to federally-recognized tribes by the Indian Gaming Regulatory Act ["IGRA"], 25 U.S.C. §§2701, et seq." (id. at 465). However, as defendant properly argues, the Carruthers case is distinguishable from the facts herein in that first, the Unkechaug were not parties to that action , and, therefore, the decision therein is not binding on them; second, the Carruthers case was decided within the context of whether the State of New York could regulate gaming activities on land that is not federally recognized as tribal lands. The Court also agrees that much of what plaintiff relies upon in Carruthers is dicta.

In any event, the Unkechaug is, and has been, recognized as an Indian tribe by the State of New York for more than 200 years (see Werth Reply Affirmation, ¶6; see also Indian Law article 10 §§150-153). Moreover, it appears that the Unkechaug "fall squarely within the umbrella of the Montoya v United States, 180 U.S. 261 [1901]...line of cases" (see, e.g. New York v Shinnecock Indian Nation, 400 F. Supp 2d 486 [E.D.NY 2005]), and are not obligated to obtain federal recognition in order to be recognized as an Indian tribe. Indeed, this Court had already determined that the Unkechaug Nation had sovereign immunity exempting it from lawsuits (see Lucielle Nieves, et al. v County of Sullivan and Unkechaug Indian Nation, et al. [Index No. 567/03, Sullivan Co. Supreme Court]).

Accordingly, defendant Unkechaug's motion to dismiss the complaint and cross claims is granted.

This constitutes the Decision and Order of this Court. The original Decision and Order and all papers are being forwarded to the Sullivan County Clerk's Office for filing. Counsel are not relieved from the provisions of CPLR 2220 regarding service with notice of entry.

SO ORDERED.

Dated: Monticello, New YorkENTER

March 23, 2006_____________________________

Hon. Robert A. Sackett, JSC

Footnotes

Footnote 1:For the purposes of judicial economy, because each of defendants' motions involve the same facts and seek similar relief, they will be addressed ad seriatim in a single decision and order of this Court.