Meyers v Rosen

[*1] Meyers v Rosen 2008 NY Slip Op 52667(U) [22 Misc 3d 1129(A)] Decided on September 9, 2008 Supreme Court, Clinton County Ryan, 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 September 9, 2008
Supreme Court, Clinton County

William E. Meyers and WENDY L. MEYERS, Plaintiffs,

against

Marlene Rosen, Defendant.



06-0218



APPEARANCES:EVAN F. BRACY, Esq., Attorney for the Plaintiffs

MARK SCHNEIDER, Esq., Attorney for the Defendant

Kevin K. Ryan, J.

Pending before the Court is the defendant's motion for summary judgment dismissing the complaint. In connection with this motion the Court has reviewed and considered the following: the notice of motion, dated June 20, 2008, the affirmation of defense counsel, dated June 13, 2008, as well as attached exhibits A through N, including the defendant's affidavit, sworn to June 12, 2008, the affidavit of her realtor, Mary Frenyea, sworn to November 7, 2007, and the affidavits of two of the defendant's friends, Elizabeth Brown and Cherisse Kirby, sworn to October 12, 2007 and October 11, 2007, respectively, defendant's memorandum of law in support of the motion, the affirmation of plaintiffs' counsel, dated June 30, 2008, as well as attached exhibits A through H, including the affidavits of John Kanoza, licensed engineer employed by the Clinton County Health Department, sworn to June 30, 2008, Mark Turner, a plumber employed by the defendants, sworn to June 30, 2008, and the plaintiffs' affidavits, both sworn to on June 30, 2008, the plaintiffs' memorandum of law, the reply affirmation of defense counsel, dated July 10, 2008, which had attached two affidavits from Thomas E. LaBombard, a licensed professional engineer, sworn to April 28, 2008 and July 9, 2008, and the reply affidavit of the defendant, sworn to July 1, 2008, the defendant's memorandum of law in reply, and the further [*2]responsive affirmation of plaintiffs' counsel, dated July 14, 2008 [FN1]

The relevant facts of this case may be summarized as follows: the parties entered into a contract for the plaintiffs to purchase a home owned by the defendant, located in Clinton County on September 3, 2005. The contract provided specifically that the house was sold in an "as is" condition, and indicated certain appliances would be left with the house but were also sold in an "as is" condition. At the time of the signing of the contract, the defendant provided a Property Condition Disclosure Statement, as required by Real Property Law 462. Item 28 on that form referred to the septic system and asked if there were any "known material defects". The choices for the answer were yes, no, unknown, or not applicable. The defendant did not select any of the answers. Item 46 asked whether there were any know material defects in the heating system and the defendant indicated "no". She did disclose that kerosene had been spilled on the property and that the Department of Environmental Conservation had been called in. The form had no question related to the condition of the appliances and the defendant stated there had not been any rodent infestation in the house.

The plaintiffs were provided with the business cards of three professional inspectors by their real estate agent as they intended to have the property inspected prior to the closing. Indeed the contract of purchase and sale included an inspection contingency clause: the plaintiffs had to receive a satisfactory written home inspection report on the house within ten days of the signing of the contract in order for the sale to go through.

On September 9, 2005, the plaintiffs' friend, John Kanoza, who is a professional engineer, inspected the property with Mr. Meyers present. The inspection raised a number of issues which were addressed prior to closing but apparently the issues of the septic system and the furnace were not raised. It does not appear that Mr. Kanoza ever issued a written inspection report.

The plaintiffs went through the house four times each prior to the closing, although not always in each other's company. They did not notice any heating issues or problems with the furnace on any of those occasions. Nor did they observe any issues of standing water in the house or yard.

On October 20, 2005, the defendant had her septic tank pumped out. The closing took place the following day but the plaintiffs were unable to conduct a final walk-through of the house prior to the closing because the defendant had not yet moved out. The following day, October 22, 2005, the final walk-through occurred during the evening but the defendant still had not removed all of her property. That same day, a new washer and dryer were installed by the plaintiffs. It does not appear that there were any water issues at that time. The plaintiffs attempted to move in the next day but found as soon as they arrived standing water in the basement, the main discharge pipe for the septic system was leaking and a fresh bead of caulk around the main discharge pipe.

The plaintiffs were advised the entire septic system had failed and had to be replaced before they could occupy the house. They paid to have a new septic system installed and moved in the early part of November. They also noticed the furnace was not working and upon [*3]examination, it was determined the propane line into the furnace had too small a diameter, causing the furnace to shut down prematurely. The plaintiffs had this problem fixed as well.

Other issues they noticed upon taking possession of the house were that the dishwasher leaked and had to be replaced, there was debris on the property, kerosene had spilled in the basement, and the house was infested with mice.

The plaintiffs commenced this action, alleging the defendant failed to disclose these defects in the Property Condition Disclosure Statement. There are no other causes of action in the complaint.

The defendant now moves for summary judgment on the grounds that there is no evidence she intentionally gave false information about the condition of the house. The plaintiffs counter that given the severity of the problems with the septic system and the furnace, the defendant must have been aware of the problems prior to the closing.

For the reasons stated below, the motion is granted in part and denied in part.

Real Property Law §460(1) provides that in the sale of residential realty, the seller must complete and sign a property condition disclosure statement. But that section goes on to state that the statute is not intended to prevent the parties from entering into a contract which conveys the real estate in an "as is" condition. If the seller fails to provide the form prior to the closing, the buyer is entitled to damages of $500.00 (Real Property Law §462(2)). The statute goes on to state that "a knowingly false or incomplete statement by the seller on this form may subject the seller to claims by the buyer" (Ibid.). The term "knowledge" is defined in Real Property Law §461(3) as "actual knowledge of a defect on the part of the seller".

A Court's task is on a summary judgment motion is issue finding rather that issue determination (see Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395 [1957]). The movant must establish their entitlement to summary judgment by evidentiary proof in admissible form sufficient to warrant judgment for them as a matter of law (see Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). If the movant fails to present sufficient evidence to eliminate material issues of fact, the motion must be denied (see Winegard v New York Univ. Med. Ctr., 64 NY2d 851, 853 [1985]). Moreover, a court must view the evidence in the light most favorable to the nonmoving party (see Boyce v Vasquez, 249 AD2d 724 [3rd Dept. 1998]).

The parties clearly entered into a contract which transferred the property in an "as is" condition. Since the only cause of action is based on a failure to disclose on the Property Condition Disclosure Form, the Court must determine whether the record supports a finding that the defendant did not knowingly make a false statement on the form. The plaintiffs have not alleged any other causes of action.

The requirement of a property condition disclosure form only came into law in 2002 and since then has generated almost exclusively trial court level decisions which, as the parties have demonstrated through their memoranda of law, have not agreed on the impact of the statute on actions by buyers against sellers. In Calvente v Levy, 12 Misc 3d 38 (2006), the Appellate Term of the Second Department upheld a small claims court's award of damages to a buyer where the seller had failed to disclose prior flooding in the basement. The Court rejected the seller's argument on appeal that the "as is" clause in the contract superseded the requirement for the property condition disclosure form since doing so would make the statute pointless. Instead, the Court reasoned the inclusion of the "as is" provision in the contract could protect the seller from [*4]future claims of breach of contract or fraud (Ibid. at 41). In this case, the plaintiffs do not allege either one of these causes of action presumably for the very reason that the "as is" clause was in their contract with the defendant. However, the central fact of the Calvente case was that it was undisputed the seller falsely stated that there had been no flooding in the basement. That is not the case here.

The plaintiffs argue that the fact the septic system failed completely in the twelve hours between the time the defendant moved out and they took possession is not coincidental: she must have known the problem existed and took steps to conceal that fact from the plaintiffs. The plaintiffs' expert, John Kanoza, who conducted the inspection of the house in September 2005, opined that typically septic systems show signs of failure for some time prior to a complete failure. His conclusion, then, was that the defendant must have known the septic system was failing. The alternative theory, propounded by the defendant's expert, Thomas LaBombard, is that the septic system had a sudden catastrophic failure. He believed that such a failure was possible when the system went from supporting the use of two persons (as when the defendant lived in the house) to four persons (when the plaintiffs moved in). But, as pointed out by plaintiffs' counsel, the failure happened before the plaintiffs had a chance to occupy the house.

If, however, the septic system did fail suddenly and without warning, the defendant cannot be held liable for failing to disclose something she did not know.

If, on the other hand, the septic system failed gradually, as both experts agree is more common, there is agreement that there would have been signs of such failure beforehand. The plaintiffs' inspector did not note any signs of failure when he inspected the house. The defendant did not prevent the plaintiffs, or those acting on their behalf, from accessing the house, as both plaintiffs stated at their depositions. There is no evidence that on any of the prior visits to the house the plaintiffs noted any signs of water in the basement or water leakage, except under one sink, a problem observed by their inspector and addressed prior to the closing. Indeed, the evening before the plaintiffs took possession, there was no sign of water in the basement.

Since Real Property Law §461 modifies the common law doctrine of caveat emptor, it must be strictly construed regarding any new rights given to the buyers and obligations imposed on the seller (Gabberty v Pisarz, 10 Misc 3d 1010, 1014 (2005), citing McKinney's Cons Laws of NY, Book 1, Statutes §301). Plaintiffs' counsel asks the Court to take heed of the legislative intent behind this statute. The court in the Gabberty case quotes from the Legislative Findings section in that "the act is not intended to and does not diminish the responsibility of buyers to carefully examine the property which they intend to purchase'" (Ibid.).

The defendant did not complete the question about the septic system in the property condition disclosure form. Her silence is not equivalent to "active concealment" that would "thwart" the plaintiffs' efforts to examine the property (Renkas v Sweers, 10 Misc 3d 1076(A) (2005)). The plaintiffs were "clearly on notice that important information was missing" so that they could not have relied on any statement regarding the septic system in the disclosure form (Gabberty v Pisarz, supra at 1016).

The Court finds that the defendant did not violate Real Property Law §461 regarding the septic system. Nor did she conceal the existence of a kerosene spill. Moreover, neither the presence of debris on the property nor the condition of the dishwasher was a part of the questioning in the form. [*5]

However, given the fact that the defendant responded "no" to the questions about material defects in the heating system and rodent infestation, the Court cannot find on the record before it that she did not know these statements to be false. That question can only be answered by assessing the credibility of the defendant which cannot be done by merely examining her deposition and prior statements.

For the reasons stated above, the defendant's motion for summary judgment is GRANTED to the extent the claim for damages for failure to reveal defects in the septic system and dishwasher, the presence of a kerosene spill as well as the presence of debris on the property is dismissed. The balance of the motion is DENIED.

IT IS ALL SO ORDERED.

E N T E R:

KEVIN K. RYAN

Acting Justice, Supreme Court

Dated:Plattsburgh, New York

September, 2008 Footnotes

Footnote 1: The parties agreed between themselves that plaintiff's counsel could submit a "sur-reply" despite the fact that such a submission is not contemplated by CPLR 2214.