681 Chestnut Ridge Rd. LLC v Edwin Gould Found. for Children

[*1] 681 Chestnut Ridge Rd. LLC v Edwin Gould Found. for Children 2009 NY Slip Op 50694(U) [23 Misc 3d 1110(A)] Decided on March 18, 2009 Supreme Court, New York County Fried, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 18, 2009
Supreme Court, New York County

681 Chestnut Ridge Road LLC, Plaintiff,

against

Edwin Gould Foundation for Children, Defendant.



108868/08



APPEARANCES:

DOUGLAS SEGAL, ESQ.

Sckenik, Segal & Graff, P.C.

404 5th Avenue

New York, NY 10018

Attorneys for Plaintiff

DALE C. CHRISTENSEN, JR., ESQ.

EILEEN E. LAFFERTY, ESQ.

Seward & Kissel, LLP

One Battery Park Plaza

New York, NY 10004

Attorneys for Defendant

Bernard J. Fried, J.

In this breach of contract action, defendant, Edwin Gould Services for Children ("Gould") move pursuant to CPLR 3211(a)(1) and (7) to dismiss the complaint.

The complaint alleges that in June, 2006, Gould, as seller, and plaintiff 681 Chestnut Ridge Road LLC, ("Chestnut"), as buyer, entered into a purchase and sale agreement ("the contract"), for a parcel of real property located at 681 Chestnut Ridge Road in Chestnut Ridge, NY. Chestnut, which was planning to develop the property in order construct homes, paid Gould $5,425,000 as a contract deposit.

The contract required Gould to deliver title of the property free and clear of liens and encumbrances other than "Permitted Exceptions" as defined in the contract. Pursuant to Section 2.2(a) of the contract, Chestnut acknowledged that, prior to entering into the agreement, it had received a copy of an April 21, 2006 title commitment and a March 16, 2006 preliminary land survey.

Section 2.2(b) of the contract provides in pertinent part: [*2]

Within ten (10) days after the receipt of any update, amendment or

change to the Title Commitment or Survey, Purchaser may provide

seller with written notice ("Purchaser Exception Notice") setting

forth a list of matters that were not set forth on Exhibit 2.2(b) (the

items set forth on Exhibit 2.2(b) are "Permitted Exceptions"),

(ii) that are not acceptable to Purchaser and (iii) either have a

material and adverse impact of the value or Purchaser's intended use

of the Property or were voluntarily created by the Seller after

January 1, 2006 ("Unpermitted Exceptions"; and all matters

reflected thereon not so objected to in a timely manner are also

herein referred to as "Permitted Exceptions") Seller and Purchaser

acknowledge that the Survey does not depict the location of easements

set forth as items 8( c) and (d) on Exhibit 2.2(b). If the survey is updated

any time prior to Closing to depict any of the easements, then Purchaser

shall have the right to send seller a Purchaser's Exception Notice

respecting such change to the Survey subject to the same terms,

conditions and limitations on Purchaser's right to send a Purchaser's

Exception Notice in respect of any other change to the Survey, provided

further, however, that Purchaser's right to object shall be limited to

the location of the relevant easement and not to its mere existence

and, further provided, that Purchaser may not object to said location

if the easement can be relocated at a reasonable cost and expense.

Purchaser acknowledges that Purchaser may not object to any said

easement (i.e. it shall constitute a Permitted Exception) if it has not

been depicted on an update to the survey prior to Closing.[FN1]

Exhibit 2.2(b) lists eight categories of Permitted Exceptions that were not subject to objection by Chestnut except under the limited circumstances described in Paragraph 2.2(b), above. The parties agree that only the second and eighth items of permitted exceptions are relevant to the issues before the court. The second item states that, "[t]he state of facts shown" on the March 16, 2006 land survey are permitted exceptions. It is undisputed that the survey shows that a small burial ground, referred to on the survey as a "cemetery", exists on the property. (Christensen Aff., Ex. 2) In addition, Exhibit 2.2(b) lists a drainage easement (Item 8[c]) and utility easements (Item 8[d]) as permitted exceptions.

The complaint alleges that after the purchase agreement was executed, Chestnut ordered an update of the land survey to depict the location of the easements. The surveyor found that the easements could not be depicted accurately on the updated survey because the metes and bounds descriptions of the location of the easements was unclear. (Schron Aff., Ex. 1) Chestnut claims that the inability to accurately depict the location of the easements adversely impacted the value of the property and Chestnut's intended use of the property. Chestnut alleges that, pursuant to Section 2.2(b), it timely notified Gould of its objections to the location of the easements (Christensen Aff., [*3]Ex. 5) and that, thereafter, Chestnut was entitled to terminate the agreement and get its deposit back because Gould failed to notify Chestnut that Gould would remedy the title defects. (Christensen Aff., Ex. 3, Section 2.3)

The complaint also alleges that after the purchase agreement was executed, Chestnut discovered that the cemetery located on the property was "active", in that a relative of those buried on the property sent Gould a letter asking permission to inter the remains of an additional family member in the cemetery plot. The complaint states that the relatives' right to enter and leave the burial plot rendered title to the property unmarketable and raised significant problems regarding the development of the property. Chestnut claims that it sent Gould a notice objecting to the title issues related to the cemetery (Christensen Aff., Ex. 7) and that, thereafter, pursuant to Section 2.3, it was entitled to terminate the contract and get its deposit back because Gould did not respond regarding Gould's willingness to remedy the title defects.

The parties engaged in extensive correspondence regarding Chestnut's position that it was entitled to terminate the agreement. In a letter dated September 4, 2007, Gould took the position that Chestnut could not terminated the contract based on the easements because the easements were permitted exceptions and that it could not terminate based on the cemetery because Chestnut knew about the burial ground when it signed the contract, and that Chestnut's purported notice was improper and could not serve as a basis for terminating the contract.

By letter dated September 12, 2007, Gould notified Chestnut that,

Under Section 3 of the Agreement, the closing contemplated thereby

was scheduled to occur yesterday, September 11, 2007, time being of

the essence. The closing did not occur as scheduled solely as a result

of a default on the part of the Purchaser. Seller was ready, willing and

able to close. Accordingly, pursuant to Section 11.1 of the Agreement,

Seller hereby elects to terminate the Agreement and to retain the deposit

(as defined in the Agreement) as liquidated damages.

(Christensen Aff., Ex. 11)

Chestnut commenced the instant action alleging in the first and second causes of action that it validly terminated the contract because of title encumbrances and that Gould breached the contract by failing to return its deposit. The third cause of action seeks a declaration that Chestnut has a lien against the property in the amount of the deposit and the fourth cause of action seeks to foreclose the alleged lien.

In support of the motion to dismiss the complaint, Gould argues that Chestnut does not have a breach of contract claim based on the easements because the updated survey did not depict the location of the easements and, Section 2.2(b) of the contract states that, "Purchaser acknowledges the Purchaser may not object to any said easement (i.e., it shall constitute a Permitted Exception) if it has not been depicted on an update to the Survey prior to Closing". It is Gould's position that Chestnut's right to object to the easements is limited to the location of the easement and not to its mere existence.

Gould argues that Chestnut knew, before it signed the agreement that original survey did not depict the location of the drainage and utility easements and that the parties did not know whether it would be possible to depict them on an updated survey. Gould contends that Section 2.2(b) expressed the parties intent that Chestnut could not object to the easements unless they were depicted [*4]in an updated survey (i.e., "right to object shall be limited to the location of the relevant [e]asement and not its mere existence") Gould claims that Chestnut had no right to object to the easements since they were not depicted in the updated survey because, contrary to the contract, Chestnut's objection is based on the existence of the easements, rather than to their location.

In addition, Gould argues that Chestnut does not have a breach of contract claim based on the relatives alleged access to the burial plot because the burial plot was depicted on the survey and listed in Schedule 2.2(b) as a Permitted Exception, not subject to objection. It states that the possibility that individuals might want access to the burial ground to visit graves or to inter the remains of relatives are attributes commonly assigned to cemeteries, and that by accepting the burial plot as a permitted exception, Chestnut accepted the commonly accepted attributes of a cemetery, as well.

Gould also claims that relatives of those buried in the plot have no right of access to the cemetery because there is no proof that the relatives have an easement related to the burial plot, or that the family reserved any rights, whatsoever, to the burial plot when it originally sold the land. Finally, Gould claims that Chestnut's Notice of Objection regarding the burial plot was improper.

Gould also claims that the third and fourth causes must be dismissed because the lien causes of action are based on based on the success of at least one of the breach of contract claims and since the breach of contract claims must be dismissed based on the documentary evidence, the third and fourth causes of action must also fail.

In opposition to the motion to dismiss the complaint, Chestnut argues that the unknowable location of the easements constitutes a material and adverse impact on the intended use of the property because it complicates Chestnut's development plans; that the unknowable location of the easements constitutes an objection to the location of the easements, not to their mere existence and that the contract is ambiguous because it does not accurately reflect the parties' intent which was that Chestnut would not have the right to terminate the purchase agreement if the easements could be depicted but that Chestnut failed to obtain an updated survey. Chestnut also claims that there are questions of fact about whether Gould knew that the easements could not be accurately depicted on the survey and whether Gould failed to disclose that information to Chestnut.

As to the burial plot, Chestnut argues that Gould knew, but failed to disclose, that the cemetery was active and that relatives of family members buried in the plot have a right of ingress and egress to the cemetery. Chestnut claims that since the cemetery dated back to 1830, it was not aware, and had no reason to believe that the cemetery was still in use; that relatives of the deceased still existed and/or that the burial plot had not been abandoned.

As to the notice issue, Chestnut contends that the deficiencies regarding the cemetery were not curable, and thus its failure to give Gould an opportunity to cure was de minimus because the law does not require the performance of meaningless acts.

On a motion addressed to the sufficiency of the pleadings, the court must accept every factual allegation as true, and liberally construe the allegations in a light most favorable to the pleading party. (Guggenheimer v. Ginzburg, 43 NY2d 268 [1977]; see CPLR 3211[a][7]). "We . . . determineonly whether the facts as alleged fit within any cognizable legal theory." (Leon v. Martinez, 84 NY2d 83, 87-88 [1994]) "The motion must be denied if from the pleadings' four corners factual allegations are discerned which taken together manifest any cause of action [*5]cognizable at law.'" (511 West 232nd Owners Corp. v. Jennifer Realty Co., 98 NY2d 144, 151-152 [2002][internal citations omitted])

However, the court is not required to accept factual allegations plainly contradicted by the documentary evidence. (Bishop v. Maurer, 33 AD3d 497 [1st Dept. 2006] aff'd 9 NY3d 910 [2007]; Robinson v. Robinson, 303 AD2d 234 [2nd Dept. 2003]; Ozdemir v. Caithness Corp., 285 AD2d 961[3rd Dept. 2001])

In Vermont Teddy Bear Co., Inc. v. 538 Madison Realty Co., 1 NY3d 470, 475 (2004) the Court of Appeals stated:

When interpreting contracts, we have repeatedly

applied the familiar and eminently sensible

proposition of law [ ] that, when parties set down

their agreement in a clear, complete document, their

writing should . . . be enforced according to its terms.

We have also emphasized the rule's special import in

the context of real property transactions, where

commercial certainty is of paramount concern, and

where the instrument was negotiated between

sophisticated, counseled business people negotiating

at arm's length.

(Internal citations and internal quotations omitted)

A. Easements

Gould correctly argues that the clear, unambiguous language of Section 2.2(b) precludes Chestnut's breach of contract claim based on the easements. At oral argument Chestnut admitted that when it sent Gould the Notice of Exception to the easements, it was not relying on an updated survey that depicted the location of the easements. (Tr. 1/15/09, p. 22, ll.25-26; p. 23, ll. 2-11) Moreover, at oral argument Chestnut acknowledged that there is nothing in the contract that permits it to terminate the agreement if the easements cannot be found. (Tr. 1/15/09, p. 23, ll. 13-20) Indeed, the agreement here specifically addresses the situation where, as here, an easement is not depicted on an updated survey. Section 2.2(b) states, "Purchaser acknowledges that Purchaser may not object to any easement (i.e., it shall constitute a Permitted Exception) if it has not been depicted on an update to the [Original] Survey prior to the Closing" and consistent with that provision, Chestnut's right to object to the easements is limited to the location of the easement, not its mere existence.

The agreement at issue was negotiated between sophisticated, counseled business people who specifically provided for the contingency that arose here that Chestnut could not object to an easement that had not been depicted on an updated survey (See, e.g., DePinto v. Ashley-Scott, Inc., 222 AD2d 288 [1st Dep't 1995]). In this case, the unambiguous contract, precludes Chestnut's claim of breach of contract based on the easements, as the contract directly contradicts Chestnut's assertion that it was entitled to file a Notice of Exception when the updated survey failed to show the location of the easements. (See, Ark Bryant Park Corp. v. City of New York, 285 AD2d 143, 150 [1st Dept 2001]["In those situations where the legal conclusions and factual allegations are flatly contradicted by the documentary evidence, they are not presumed to be true or accorded every favorable inference."]) [*6]

B. Burial Plot

Chestnut's assertion that it was entitled to file a Notice of Exception regarding the burial plot is equally without merit. It is undisputed that the burial plot was identified on the original survey and as such it was included in item two in Schedule 2.2(b) as a "Permitted Exception". Here, the documentary evidence, in particular the July 25, 1962 letter written by a member of the family that once owned the land and the burial plot, discusses the burial plot and states:

Further facts to complete the background: This part of the former

Talman farm passed into a branch of the family that did not except

the plot in subsequent sales. My father at one time opened arrangements

to fence off the plot when the property belonged to the Salvation

Army, but no action resulted.

****

I shall of course waive any rights except (sic) the privilege of an

occasional visit.

(Schron Aff., Ex. 4)

This situation can be distinguished from that in Picotte v. Smith, 110 Misc. 144, 150-151 (Supreme Ct., Schenectady Trial Term 1920), upon which Chestnut relies, because in Picotte the prior owner of the property clearly reserved the rights of burial and ingress and egress to the cemetery.

Although, as Chestnut states, the cemetery dated to 1830, ashes were interred with an inscribed marker in 1962. Chestnut's statement that it had no reason to believe that the cemetery had not been abandoned and that no relatives existed is mere speculation, particularly because a simple walk through the burial plot would have revealed the recent marker. (See, Gartner v. Young-Hee Lowe, 299 AD2d 198 [1st Dept 2002]["since there is no evidence that plaintiff concealed anything that plaintiff could not have discovered for himself by appropriate inquiry, the . . . court properly applied the doctrine of caveat emptor.")Moreover, even if the burial ground was somehow subject to objection under the purchase agreement, Chestnut failed to properly object to the burial ground because, first it sent a notice of termination, based on a previous exception notice related to easements. The termination notice included vague objections regarding the burial ground. (Christensen Aff., Ex. 7) The following day, Chestnut sent a second termination letter that included greater detail regarding the burial plot, but that letter failed to give Gould an opportunity to cure as required by Sections 2.2(b) and 2.3 of the contract. Plaintiff was not excused from its notice obligation because it believed, without more, that the alleged defects were not curable. (R.C.P.S. Associates v. Karam Developers, 258 AD2d 510, 511 [2nd Dept 1999][appellant failed to establish that any of the defects were incurable, and that its advanced rejection of title and demand for the return of its down payment constituted an anticipatory breach of contract.])

Because the first and second causes of action are contradicted by the unambiguous language of the contract, the third and fourth causes of action for imposition of a lien and for foreclosure and sale of the property are dismissed because they are predicated on the failed breach of contract claims.

Accordingly, it is ORDERED that defendant Gould's motion to dismiss the complaint is granted in its entirety and the complaint is dismissed; and it is further [*7]

ORDERED that the Clerk is directed to enter judgment accordingly.

DATE_______________________

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J.S.C. Footnotes

Footnote 1:The Fifth Amendment to the Purchase and Sale Agreement deleted the word "Closing" and inserted the date "August 15, 2007" in its place.