Opinion
No. 2450 Index No. 653140/23 Case No. 2024-00548
06-06-2024
Apple Bank for Savings, Plaintiff-Appellant, v. Prime Rok Real Estate, LLC, et al., Defendants-Respondents, Stern Tannenbaum & Bell LLP, Nominal Defendant.
Tarter Krinsky & Drogin LLP, New York (Dean G. Yuzek of counsel), for appellant. Castro Law Group PLLC, New York (Claude Castro of counsel), for respondents.
Tarter Krinsky & Drogin LLP, New York (Dean G. Yuzek of counsel), for appellant.
Castro Law Group PLLC, New York (Claude Castro of counsel), for respondents.
Before: Webber, J.P., Oing, Kapnick, Rosado, Michael, JJ.
Order, Supreme Court, New York County (Lyle E. Frank, J.), entered January 16, 2024, which granted defendants Prime Rok Real Estate, LLC and 626 Pelham Operating, LLC's motion for summary judgment on their claim that they are entitled to the return of their deposit based on counsel for plaintiff's unauthorized practice of law, and denied plaintiff's motion for summary judgment, unanimously modified, on the law, to deny defendants' motion, and otherwise affirmed, without costs.
Plaintiff commenced this action against defendants, alleging that their failure to attend two time of the essence closings constituted a default under the parties' purchase and sale agreement, and that plaintiff was thereby entitled to the deposit. Apparently, unbeknownst to plaintiff, one of the attorneys representing them in the transaction from the law firm of Stern Tannenbaum & Bell LLC was suspended from practicing law at the time for failing to file his biennial attorney registration.
Under the circumstances presented, the motion court erred in granting defendants' motion for summary judgment based entirely on the attorney's unauthorized practice of law (see Dunn v Eickhoff, 35 N.Y.2d 698, 699 [1974]). In light of the fact that plaintiff was unaware of his suspension, that he was working under the supervision of a partner at the firm, that he was promptly terminated after Stern Tannenbaum became aware of the suspension, and that there was no prejudice to defendants, the entire real estate transaction here is not null and void simply by virtue of his work on it (see id.; see also Arrowhead Capital Fin., Ltd. v Cheyne Specialty Fin. Fund L.P., 32 N.Y.3d 645, 650 [2019]).
In any event, defendants failed to establish prima facie entitlement to summary judgment on their claim for the deposit, as they failed to show that they demanded good title from plaintiff, informed it of specific defects in title prior to the closing, or provided it with reasonable time to cure the exceptions noted by the title insurer (see Hu v Leff, 158 A.D.3d 419, 420 [1st Dept 2018]; Latipac Corp. v BHM Realty LLC, 148 A.D.3d 466, 466 [1st Dept 2017]; Roman v Watson, 297 A.D.2d 319 [2d Dept 2002], lv denied 99 N.Y.2d 505 [2003]). Moreover, plaintiff established that it made immediate and diligent efforts to obtain documentation showing that it was authorized to execute the sale by its shareholders, and ultimately found another title insurer that determined that its proof was sufficient to provide insurable authorization for the sale of the property (see Laba v Carey, 29 N.Y.2d 302, 307-308 [1971]).
However, plaintiff is also not entitled to summary judgment, as there remain issues of fact as to whether the exception noted by defendants' title insurer was a "Permitted Encumbrance" under the purchase and sale agreement (see 2626 Bway LLC v Broadway Metro Assoc., LP, 85 A.D.3d 456, 457 [1st Dept 2011]; NYC 4900 Holdings LLC v Sternhell, 189 A.D.3d 505 [1st Dept 2020]). The title insurer engaged by plaintiff after the initial closing date did not expressly state that it was willing, without special premium, to omit the issue as an exception to coverage.