Amiri v Gurusamy
Annotate this CaseDecided on December 23, 2021
County Court, Albany County
Yasin Amiri and Shabana Amiri, Plaintiffs/Respondents,
against
Sudhakar Gurusamy and Devisri Natarajan, Defendant/Appellants.
Index No. CA 236-21
For Appellant:
MAYNARD, O'CONNOR, SMITH & CATALINOTTO, LLP
Bridget Schultz, Esq., of counsel
6 Tower Place
Albany, New York 12203
For Respondents:
ZAPPONE & FIORE LAW FIRM
Patrick C. Fiore, Esq. of counsel
800 Route 146-Suite 320
Clifton Park, New York 12065
Andra Ackerman, J.
This appeal arises from a residential real estate transaction involving the Defendants/Appellants, Sudhakar Gurusamy and Devisri Natarajan (hereinafter "sellers") and Plaintiffs/Respondents Yasin and Shabana Amiri (hereinafter "purchasers"). The sellers contracted to sell their residence at 18 Lilac Lane, Latham to the purchasers "as is" and without warranty. Approximately one month after the closing, the purchasers noticed a "musty" odor and water seeping into the home's basement—they then commenced this action alleging that the sellers must have known of the water issues and failed to disclose them prior to closing. The sellers moved for summary judgment contending that the case record established that they had no actual knowledge of water seepage problems; that they concealed no portion of the property from the purchasers or their home inspector, and that the property was sold "as is" to purchasers.
By Decision and Order dated March 31, 2021, City Court, City of Albany (Hon.William [*2]Kelly, Jr.) denied the sellers' motion for summary judgment finding that there "are triable issues of fact which may require a plenary trial." The sellers now appeal to this Court from the City Court's denial of their motion for summary judgment seeking dismissal of the complaint.
Factual Background
In or about October 2017, the sellers listed their residence located at 18 Lilac Lane, Latham, New York for sale. On or about March 13, 2018, the sellers executed a contract for purchase and sale with the purchasers. Section 14 of the contract afforded purchasers a right of inspection and access to the property within 48 hours prior to the transfer of title. Purchasers inspected the property approximately six times prior to the closing. They did not notice any unusual odors or water issues in the basement of the residence. Purchasers also retained McLaughlin Home Inspections to conduct a residential home inspection and the home inspector prepared a report finding no signs of water penetration into the structure, nor did the inspector make any recommendations to repair or replace any component of the basement.
Section 20 of the contract stated that the property was sold "as is" without warranty as to condition, and the purchasers agreed to take title to the building "as is" in its present condition subject to reasonable use, wear and tear and natural deterioration. As required by New York Real Property Law § 465 (2) sellers prepared and delivered to purchasers a Property Condition Disclosure Statement ("PCDS"). The PCDS required the sellers to answer all questions based upon their actual knowledge. The sellers had lived in the residence for approximately 13 years. In response to questions on the PCDS, they stated that they had no knowledge of any rot or water damage to the structure; they indicated that they had no knowledge of any flooding, drainage or grading problems that resulted in standing water on any portion of the property and, they had no knowledge of any seepage that resulted in standing water in the basement.
On May 9, 2018, the date of the closing, the purchasers had their final walk through and inspection of the property. They did not notice any odor emanating from the basement or any wet areas in the basement. One month after the closing, purchasers contend that they noticed a "musty smell" coming from the basement and they discovered moisture and wetness when they removed the basement carpet. Later after two days of rain, the purchasers claim to have noticed rainwater entering the home through the siding of the property and pooling in the basement.
On August 29, 2018, purchasers commenced this action in Albany City Court seeking recovery of $13,300.00 from sellers for alleged breach of contract, fraud, unjust enrichment and quantum meruit. Each of the causes of action is based on the claim that sellers knew or should have known of the long-term water/flooding problem in the basement of the house and they were under a duty to disclose the water/flooding problem to the purchasers. To support this theory, the purchasers submitted an e-mail from Donald MacDowell which stated that the problem with the home stemmed from shrubbery installed on the property that caused water to pool around the residence. The e-mail did not describe Mr. MacDowell's qualifications, nor was it notarized or otherwise in admissible form.
The Motion for Summary Judgment
On February 24, 2020, sellers moved for summary judgment contending that there was no evidence that they knew of water seepage before the transfer of title. The sellers also established that they prepared the PCDS based on their actual knowledge of the property, and they concealed no parts of the property from the purchasers or their agents during the inspections. The purchasers opposed the motion for summary judgment. They contended that two contractors had concluded that there was a longstanding water problem with the property, [*3]but they failed to submit an affidavit to that effect. They also argued that summary judgment should be denied because the sellers had contacted their insurance company to find out whether legal counsel could be assigned to represent them in this action. Finally, they relied on a statement from one of the sellers at deposition that an unidentified insurance company representative had told him that coverage for the loss was denied because "they do not insure foundation leaks."
On March 31, 2021, Albany City Court denied the sellers motion for summary judgment dismissing the complaint. As to the applicable evidentiary burdens on the motion, the court found that the purchasers (non-movants) had established a prima facie case and the sellers (movants) had raised issues of fact requiring a trial. The sellers filed a timely appeal and have filed a record and brief. The purchasers have opted not to file a brief and instead "rest on the record."
Discussion-Summary Judgment Standard
The proponent of a summary judgment motion must make a prima facie showing of judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case (Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). Once the moving party has proffered evidence establishing a prima facie entitlement to judgment as a matter of law, the burden shifts to the party opposing the motion to establish by affidavits or other evidentiary facts or materials the existence of material issues of fact requiring a trial (Indig v Finkelstein, 23 NY2d 728 [1968]). The proof submitted in opposition to the motion should be in admissible form—unsworn statements standing alone are generally insufficient to defeat a motion for summary judgment (Whiteside v Stachecki, 180 AD3d 1291 [3d Dept 2020]). To the extent the party opposing summary judgment relies solely or principally on hearsay, she must demonstrate an acceptable excuse for her failure to meet the requirement of tender in admissible form (Zuckerman, at p. 562)
City Court misstated the applicable burdens on the motion for summary judgment in holding that "plaintiffs has [sic] established a prima facie case and defendants has [sic] raised issues of fact sufficient to require a trial." Rather, the initial burden on the motion rested with the defendant-sellers to establish their entitlement to summary judgment, and provided that burden was met, the burden then shifted to the plaintiff-purchasers to offer proof in admissible form to raise material issues of fact requiring a trial.
Applying the summary judgment standard, the sellers established their prima facie entitlement to summary judgment by submitting proof eliminating any material issues of fact from the case. Specifically, the sellers showed that the property was sold "as is" and they had no knowledge of water seepage before the transfer of title. They also established that they prepared the PCDS based upon their actual knowledge of the property, and they concealed no parts of the property from purchasers during numerous on-site inspections. Indeed, the purchaser's own home inspector uncovered no evidence of water problems or odors with the residence. Because the sellers met their initial burden on the motion for summary judgment, the burden shifted to the purchasers to offer proof in admissible form which created an issue of fact requiring a trial.
The purchasers opposed the motion by offering 1) an unsworn e-mail from Donald MacDowell suggesting that the water problem with the house was created when shrubbery was installed and water built up around the house; 2) unsworn quotes from a carpet company and a contractor which offer no opinions as to the cause of the water problem; 3) an unsupported statement that the water problem was "longstanding" ; 4) a general statement that the sellers [*4]must have known of the water problem because they contacted their insurance company after being sued to place the company on notice of the claim against them, and 5) a statement from the seller's deposition testimony that an unidentified representative of the sellers' liability insurer told him that they do not provide coverage for foundation leakage. Each cause of action alleged in the complaint must be examined in conjunction with the purchasers' opposition to summary judgment to determine whether the purchasers' proof raises an issue of fact requiring a trial.
Summary Judgment and the Causes of Action in the Complaint
The first cause of action alleged in the complaint seeks recovery for breach of contract and alleges: that water seepage was a longstanding problem with the property that predated the transfer of title; that sellers knew or should have known of this water problem and that sellers breached the real estate contract and PCDS by making false statements regarding the condition of the property. As damages, the purchasers seek $13,300.00, the cost to repair the water damage.
Summary judgment should have been granted dismissing the first cause of action for breach of contract. First, the contract of sale disclaimed the existence of any warranties or representations regarding the condition of the property and a cause of action based on alleged misrepresentations made in the PCDS must fail where, as here, the contract disclaims any warranty or representation as to the property's condition (Simone v. Homecheck Real Estate Services, 42 AD3d 518 [2d Dept 2007]). The cause of action for breach of contract is solely based upon representations made in the PCDS. Second, the cause of action for breach of contract should have been dismissed because it is based upon an allegation that the sellers "knew, or should have known, of the long-term water flooding problem in their basement." Under New York law, the seller is only required to complete a PCDS based upon her actual knowledge of the property (Meyers v. Rosen, 69 AD3d 1095, 1097 [3d Dept 2010]). Summary judgment is warranted where there is no proof that the sellers knowingly misrepresented a material fact on the property disclosure statement (Kazmark v. Waslyn, 167 AD3d 1386, 1387 [3d Dept 2018]).
The proof offered by purchasers does not raise a question of fact. The three unauthenticated documents offered by purchasers—the carpet company quote, the quote from the contractor and the MacDowell e-mail were not in admissible form since they were unsworn and not even signed. They amounted to inadmissible hearsay which standing alone (and without an excuse for offering admissible evidence instead) may not be used to defeat summary judgment (Candela v. City of New York, 8 AD3d 45 [1st Dept 2004]). Additionally, other than the MacDowell e-mail the repair quotes do not address the actual cause of the alleged water leakage.
The vague statement that the water problem was "longstanding" is insufficient to defeat summary judgment because it is not supported by an affidavit from an expert or from an individual with personal knowledge of the condition of the property. The fact that the seller's put their carrier on notice of a claim does not establish liability and is inadmissible (Bevilacqua v. Gilbert, 143 AD2d 213 [2d Dept 1988]; Salm v. Moses, 13 NY3d 816 [2009]; Grogan v. Nizam, 66 AD3d 734 [2d Dept 2009]). Finally, the purchasers' reliance on the statements in the insurance company disclaimer letter or in the sellers' deposition testimony concerning a conversation with an unidentified insurance company representative who allegedly denied coverage due to "foundation leaks" is misplaced because both statements amount to inadmissible hearsay or double hearsay (Candela supra at p. 45). These statements do not tend to establish the sellers' actual knowledge of a defect—instead they improperly rely on speculation and [*5]conjecture to support this conclusion (Zuckerman v. City of New York, supra at p. 562). Also, to defeat summary judgement with inadmissible hearsay, purchasers would need to proffer an acceptable excuse for the failure to meet the requirement of tender in admissible form. This requirement purchasers have completely failed to meet and, therefore, summary judgment is warranted.
The second cause of action seeks recovery for fraudulent inducement based on the claim that the sellers "fraudulently withheld pertinent information" and "thereby fraudulently induced the Plaintiff to go forward with the purchase of said real property." As a procedural matter, the cause of action for fraud should have been dismissed because it is duplicative of the first cause of action for breach of contract (RGH Liquidating Trust v. Deloitte & Touche LLP, 47 AD3d 516, 517 [1st Dept 2008]). Moreover, summary judgment on the second cause of action was warranted because New York adheres to the doctrine of caveat emptor and imposes no liability on the seller for failing to disclose information concerning the premises, unless the seller engages in acts of active concealment of a condition (Rojas v. Paine, 101 AD3d 843, 845 [2d Dept 2012]). Here, the contract of sale disclaimed any representations concerning the condition of the property and there is no proof of active concealment on the part of the sellers. Indeed, the purchasers and their home inspector visited the property many times and raised no issues prior to the sale of the premises. There are no triable issues on the fraud claim requiring a trial.
The third cause of action seeks recovery for unjust enrichment. The purchasers allege that had they known of the water seepage problem they would have either negotiated a lower price or required the sellers to make repairs prior to the transfer of title. This cause of action fails as a matter of law because the purchasers have neglected to plead and offer proof to support this quasi-contract claim. To support a claim for unjust enrichment, the plaintiff must allege and prove that 1) the other party was enriched, 2) at that party's expense, and 3) that it is against equity and good conscience to permit the other party to retain what is sought to be recovered (Georgia Malone & Co. Inc.v. Rieder, 19 NY3d 511 [2012]). Here, the complaint is lacking these elements and the proof establishes that the transaction was done at arm's length; that the sellers had no actual knowledge regarding water-related issues, and that the purchasers conducted inspections of the property that uncovered no water-related issues.
The fourth cause of action is for quantum meruit. This cause of action repeats the allegations set forth in the claim for unjust enrichment, namely that had the purchasers known of the alleged water seepage problem they would have either negotiated a lower price or required the sellers to make repairs to the property. A party seeking recovery for quantum meruit must demonstrate: 1) the performance of services in good faith; 2) the acceptance of the services by the person to whom they are rendered; 3) an expectation of compensation therefor and 4) the reasonable value of the services allegedly rendered (Crown Const. Builders v. Chavez, 130 AD3d 969 [2d Dept 2015]). Here, the sellers performed no services for the purchasers—therefore the claim is facially insufficient. Moreover, where, as here, there exists a binding sales contract which specifically provides that the property is sold "as is" there can be no recovery in quasi-contract for quantum meruit (Clark-Fitzpatrick, Inc. v. Long Is. R. Co., 70 NY2d 382, 388 [1987]).
In conclusion, City Court should have granted the sellers' motion for summary judgment because the moving party (sellers) established their entitlement to dismissal as a matter of law and the purchasers failed to submit admissible evidence to create a genuine issue of fact requiring a trial. Accordingly, it is hereby
ORDERED, that the Decision and Order of City Court dated March 31, 2021 and mailed on April 23, 2021 is hereby reversed, the defendant-appellant sellers' motion for summary judgment is granted, and the complaint is dismissed.
Dated: December 23, 2021
Albany, New York
ANDRA ACKERMAN, JCC
Papers Considered:
1. Record on Appeal dated 9/8/2021
2. Appellants' Brief dated 9/9/2021
3. Letter of Respondent's Counsel dated 11/1/2021
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