Walker v Berman

[*1] Walker v Berman 2009 NY Slip Op 50887(U) [23 Misc 3d 1122(A)] Decided on May 4, 2009 Supreme Court, New York County Stallman, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 May 4, 2009
Supreme Court, New York County

Jennifer Walker, Plaintiff,

against

Ira L. Berman and Insignia Douglas Elliman, LLC d/b/a Prudential Douglas Elliman, Defendants.



113810/05



Appearances:

For Plaintiff:

Eric W. Berry Law Office, PC

By: Eric W. Berry, Esq.

132 Nassau Street, 13th Floor

New York, New York 10038

(212) 355-0777

For Defendant Insignia Douglas Elliman, LLC:

Malepero & Prisco, LLP

By: Ian B. Forman, Esq. and

Andrew L. Klauber, Esq.

295 Madison Avenue

New York, New York 10017

(212) 661-7300

Michael D. Stallman, J.

Insignia Douglas Elliman, LLC d/b/a Prudential Douglas Elliman (defendant) moves, pursuant to CPLR 3212, for summary judgment to dismiss the complaint against it. Previously, plaintiff was awarded a default judgment against defendant Ira L. Berman (Berman), and the action against him was severed. The only cause of action that remains is one for breach of fiduciary duty against defendant-movant.

BACKGROUNDIn 1999, plaintiff was looking for an apartment building to purchase, and retained Fay Robin (Robin), an employee of defendant, as the selling broker. Because Robin was the selling broker, the [*2]parties did not enter into a letter of engagement or brokerage agreement. Plaintiff indicated that she was in the market for a self-managed apartment building where plaintiff could assume a role similar to an acting superintendent.

Plaintiff worked in film and television production, and as a yoga instructor/studio owner, and had no experience in real estate investment. During the summer and fall of 2001, plaintiff was informed that the building located at 151 West 76th Street, New York, New York, was available for sale. Robin provided plaintiff with the listing, the information appearing therein having been supplied by the owner and the owner's listing broker, who was employed by Helmsley-Spear. Neither the owner nor the owner's listing broker have been named as parties to this action. According to her affidavit (Ex. O), Robin had no information about the building other than what appeared on this listing, and she conveyed to plaintiff whatever Robin knew about the building.Plaintiff expressed interest in the property, and made several site visits to the building, and met with the owner. Plaintiff eventually made an offer on the building, and in June, 2003, retained Berman as her attorney to perform the legal work necessary to complete the purchase of the building. A contract of sale was drawn up, read and reviewed by Berman. According to the complaint, when plaintiff retained Berman, he held himself out to be an expert in real estate law. Berman also told plaintiff that he was knowledgeable about the due diligence required for the purchase of a building, and that he would undertake a complete and competent investigation in connection with plaintiff's purchase of the property.

According to her affidavit, Robin was not involved in the due diligence investigation, and she states that she is not an attorney. Ex. O.

In response to interrogatories, plaintiff said that she was aware that the due diligence process was the obligation of her attorney, not the obligation of her real estate broker. Ex. F.

The contract of sale was negotiated between the parties, and indicated that the building was classified as a Class "B" Multiple Dwelling. Ex. G. A Class "B" Multiple Dwelling is a dwelling that is intended for use as the temporary abode of individuals and families; the classification includes hotels, lodging houses, rooming houses, boarding houses, boarding schools, furnished room houses, lodgings, club houses, colleges, and dwellings designated as private dwellings but occupied by one or two families with five or more transient boarders, roomers or lodgers in one household. Multiple Dwelling Law § 4. The Class "B" Multiple Dwelling designation also appears on the certificate of occupancy search ordered by plaintiff prior to agreeing to the purchase (Ex. N), and on the listing notice provided to plaintiff by defendant (Ex. H). [*3]

The contract of sale also stated that plaintiff was purchasing the building "as is," and was not relying on the representations of any person in making the purchase. The contract further states that plaintiff has made a full investigation. Ex. G.

As part of his due diligence, Berman discovered that there was no Certificate of Occupancy for the building, and that the building was erected in 1884, prior to the enforcement of the Certificate of Occupancy regulations. Berman's search also indicated that the building was classified as a Class "B" Multiple Dwelling. Defendant asserts, and plaintiff does not dispute, that neither plaintiff nor Berman requested any documents from defendant regarding the title or legal classification of the building.

After the contract was signed, but prior to closing, plaintiff informed Robin that there were some problems with the Certificate of Occupancy, and, allegedly, Robin advised plaintiff to confer with her attorney regarding the legal ramifications associated with the Certificate of Occupancy.

After the closing, plaintiff discovered that the Class "B" Multiple Dwelling classification is used for buildings operated as a Single Room Occupancy (SRO) dwelling, not a regular apartment building (i.e., a Class A multiple dwelling). Consequently, plaintiff asserts that she paid far more for the building that it is worth, believing it to be an apartment building, not an SRO.

In the complaint, plaintiff alleges, in paragraph 16, that

"[o]n information and belief, at the time Robin introduced

[plaintiff] to the property, Robin and [defendant] were

aware of the Building's SRO classification. This allegation

is based on the fact that Robin and [defendant] routinely

access the DOB's website information concerning the

properties they market and, on this website, the Building's

status is prominently identified as "SRO Restricted."

Nevertheless, neither Robin nor anyone else at [defendant]

informed [plaintiff] of the Building's SRO status."

This is the only factual allegation against defendant in the complaint. The rest of the complaint details Berman's alleged negligence and malpractice associated with his due diligence. The cause of action against defendant is based on an alleged breach of its fiduciary duty of full disclosure or, alternatively, its breach of fiduciary duty of due care in failing to ascertain that the DOB website identified the building as having an SRO status.

Plaintiff asserts that the DOB website, which is public, first became available in August of 2001, two years prior to plaintiff's purchase of the property, but there is no proof or allegation that the information regarding the subject premises was included in the initial website.

In her opposition, plaintiff avers that defendant's motion is [*4]premature, because she has not yet deposed Robin as ordered by the court as part of the discovery process. However, Robin was deposed on January 22, 2009, rendering this argument moot.

DISCUSSION

"The proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case [internal quotation marks and citation omitted]." Santiago v Filstein, 35 AD3d 184, 185-186 (1st Dept 2006). The burden then shifts to the motion's opponent to "present facts in admissible form sufficient to raise a genuine, triable issue of fact." Mazurek v Metropolitan Museum of Art, 27 AD3d 227, 228 (1st Dept 2006); see Zuckerman v City of New York, 49 NY2d 557, 562 (1980). If there is any doubt as to the existence of a triable fact, the motion for summary judgment must be denied. See Rotuba Extruders v Ceppos, 46 NY2d 223, 231 (1978).

Neither party disputes that real estate brokers are fiduciaries with respect to their principals, and owe a duty to act in the principals' best interests.[FN1] Dubbs v Stribling & Associates, 96 NY2d 337 (2001). Included in these fiduciary obligations is the duty of the broker to disclose all material information that it may possess or obtain concerning the real estate transaction involved. Precision Glass Tinting, Inc. v Long, 293 AD2d 594 (2d Dept 2002). See also, Murph & Fritz's Place, Inc. v Loretta, 112 Misc 2d 554 (City Ct, Buffalo 1982). However, a real estate broker is not under any obligation to act as its principal's legal advisor regarding relevant provisions of applicable statutes. Donnelly v Margolis, 265 AD2d 523 (2d Dept 1999); see also Matter of New York County Lawyers' Association (Wenger), 186 Misc 966 (Sup Ct, NY County 1946) (real estate broker may not render legal advice or counsel).

Nowhere does plaintiff allege that defendant consciously withheld the true state of the building's classification from plaintiff, nor does she allege that defendant in any way misrepresented the building's status. Additionally, the information that the building was classified as a Class "B" Multiple Dwelling was provided to plaintiff in the listing information defendant gave to her, as well as in the certificate of occupancy search conducted on plaintiff's behalf. Moreover, in her affidavit, plaintiff admits that it was her attorney who was responsible for conducting due diligence on the property.

The information regarding the building's classification was a [*5]matter of public record, and was not a matter peculiarly within defendant's knowledge. See generally East 15360 Corp. v The Provident Loan Society of New York, 177 AD2d 280 (1st Dept 1991); Rodas v Manitaras, 159 AD2d 341 (1st Dept 1990). Plaintiff could have discovered the true facts about the building by exercising ordinary intelligence. Killough v Shiels, 45 AD3d 1159 (3d Dept 2007). Plaintiff's failure, or the failure of her attorney, to exercise due diligence prior to closing, in and of itself, would support a dismissal of her claim against defendant. Id.; Joseph v NRT, Incorporated, 18 Misc 3d 296 (Civ Ct, NY County 2007).Additionally, plaintiff made several inspections of the building, and she also had the right of inspection up until the closing, all of which afforded her the means to discover the definition of the building's classification. Davidson Metals Corp. v Marlo Development Co., 238 AD2d 463 (2d Dept 1997); see also KNK Enterprises, Inc. v Harriman Enterprises, Inc., 33 AD3d 872 (2d Dept 2006), appeal denied 8 NY3d 804 (2007).

Plaintiff argues, in her opposition memorandum, that the building's legal classification is factual information, not legal advice, and that had Robin told plaintiff what the classification was, she, plaintiff, could have protected herself by learning the building's SRO status. However, as indicated above, the fact of the building being classified as a Class "B" Multiple Dwelling was provided to plaintiff and her counsel in several documents, and plaintiff and her counsel failed, despite plaintiff's assertions, to investigate what such classification meant. Plaintiff cannot now shift the responsibility to defendant to make up for the shortcomings of herself and her attorney.

Plaintiff has failed to come forward with evidentiary facts sufficient to raise any question of material fact to rebut defendant's motion. Estee Lauder Inc. v OneBeacon Insurance Group, LLC, ___ AD3d ___ (1st Dept 2009). The case cited by plaintiff, 23 Realty Associates v Teigman (213 AD2d 306 [1st Dept 1995]), is inapposite, because in that case the real estate broker actively concealed the subject building's multiple dwelling classification, which is not even alleged in the case at bar.

CONCLUSION

Based on the foregoing, it is hereby

ORDERED that defendant's motion for summary judgment is granted and the complaint dismissed; and it is further

ORDERED that the Clerk is directed to enter judgment accordingly.

Dated: May 4, 2009ENTER:

New York, New Yorks/

____________________________

Michael D. Stallman, J.S.C. Footnotes

Footnote 1: Although there is no written agreement between the parties that creates a broker-client fiduciary obligation, neither side denies that such a relationship existed.